[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT ________________________ FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT No. 00-12858 JUNE 28, 2001 ________________________ THOMAS K. KAHN CLERK D. C. Docket No. 00-00454-CV-J-S
MAURICE RICHARDSON, an individual, KAREN RICHARDSON, an individual,
Plaintiffs-Appellees,
versus
PALM HARBOR HOMES, INC., a corporation,
Defendant-Appellant. ________________________
Appeal from the United States District Court for the Northern District of Alabama _________________________ (June 28, 2001)
Before WILSON and COX, Circuit Judges, and RYSKAMP*, District Judge.
COX, Circuit Judge:
* Honorable Kenneth L. Ryskamp, U. S. District Judge for the Southern District of Florida, sitting by designation. Palm Harbor Homes, Inc., a retailer of mobile homes, appeals the district
court’s denial of its motion to compel arbitration of a breach-of-express-warranty
claim against it. We reverse and remand.
Background
Maurice and Sabrina Richardson bought a mobile home manufactured by Grand
Manor Homes, Inc. from Palm Harbor. Grand Manor issued them a one-year warranty
against defects in materials and workmanship. The mobile home proved on delivery
to be riddled with such defects, and the Richardsons immediately requested repair
under the warranty. Unsatisfied with the response, the Richardsons sued Palm Harbor,
Grand Manor, and Bombardier Capital, Inc., which financed their purchase, for breach
of written, express, and implied warranties.
Palm Harbor (as well as the other defendants) moved to compel arbitration of
the claims against it based on a predispute agreement, signed by Mr. Richardson at
closing, in which Mr. Richardson and Palm Harbor agreed to binding arbitration of
all disputes between them about the mobile home, including warranty disputes. The
Richardsons opposed Palm Harbor’s motion, in part because they believed that the
Magnuson-Moss Warranty Act (MMWA), 15 U.S.C. § 2310(a), voided their
predispute assent to arbitrate.
2 The district court agreed with the Richardsons in part, holding that the MMWA
prohibits arbitration of express-warranty claims. The court accordingly denied Palm
Harbor’s motion to compel arbitration of the express-warranty claims against it. The
court did, however, compel arbitration of the implied-warranty claims against Palm
Harbor.1
Palm Harbor appeals, invoking our jurisdiction under 9 U.S.C. § 16(a). (The
Richardsons have not invoked our pendent appellate jurisdiction to cross-appeal, and
the part of the order compelling arbitration is therefore not before us.) Palm Harbor
makes two alternative arguments: first, that the MMWA does not prohibit binding
arbitration at all; and second, that even if it did, it would not bar arbitration of the
specific claims that the Richardsons have made against Palm Harbor. These
arguments present legal issues about the arbitrability of certain claims, and we
consider them de novo. See Paladino v. Avnet Computer Techs., Inc., 134 F.3d 1054,
1060 (11th Cir. 1998) (Cox, J., joined by Tjoflat, J.).
1 The district court initially declined to compel Mrs. Richardson to arbitrate because she is not a party to the arbitration agreement. It later reversed that ruling, however, on the ground that Mrs. Richardson is a third-party beneficiary of the arbitration agreement. Mrs. Richardson has not appealed that ruling.
3 Discussion
The Federal Arbitration Act (FAA), 9 U.S.C. § 2, explicitly makes predispute
arbitration agreements presumptively enforceable if they “evidenc[e] a transaction
involving commerce,” which this one undisputedly does. Congress may, of course,
revoke this approval of arbitration agreements and “preclude a waiver of judicial
remedies for the statutory rights at issue.” Shearson/Am. Express, Inc. v. McMahon,
482 U.S. 220, 227, 107 S. Ct. 2332, 2337 (1987). Such an intent must be “‘deducible
from [the statute’s] text or legislative history’” or “from an inherent conflict between
arbitration and the statute’s underlying purposes.” Id., 107 S. Ct. at 2338 (quoting
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.
Ct. 3346, 3354 (1985) (alterations in Shearson)). No one argues that enforcing
predispute arbitration agreements “inherently conflicts” with a statute that regulates
consumer warranties, but the Richardsons contend — with support from at least two
courts — that the MMWA’s “text or legislative history” show an intent to override the
FAA and to render unenforceable predispute agreements to submit warranty disputes
to binding arbitration. See Wilson v. Waverlee Homes, Inc., 954 F. Supp. 1530, 1539
(M.D. Ala.) (Thompson, J.), aff’d without opinion, 127 F.3d 40 (11th Cir. 1997); S.
Energy Homes, Inc. v. Lee, 732 So. 2d 994, 999-1000 (Ala. 1999), overruled, S.
Energy Homes, Inc. v. Ard, 772 So. 2d 1131, 1135 (Ala. 2000); see also Cunningham
4 v. Fleetwood Homes of Ga., Inc., ___ F.3d ___, ___ (11th Cir. 2001) (a
manufacturer may not avail itself, as a third-party beneficiary, of a presale arbitration
agreement between the retailer and the consumer, when the warranty does not mention
the arbitration agreement).
The Richardsons’ and these courts’ reasoning relies on inferences from the
statute, its history, and interpretation of the Act by the Federal Trade Commission
(FTC). First, the statute provides a federal judicial forum for claims of breach of
written or implied warranties. See 15 U.S.C. § 2310(d); Wilson, 954 F. Supp. at 1537
(starting its analysis with the observation that the MMWA expressly provides a
federal cause of action). Second, the MMWA endorses, and makes enforceable,
provisions in written warranties requiring nonbinding dispute resolution, provided that
the informal procedures prescribed comply with regulations issued by the FTC. See
15 U.S.C. § 2310(a)(1)-(3)2; Cunningham, ___ F.3d at ___. The FTC’s regulations
2 The MMWA provides in pertinent part:
(1) Congress hereby declares it to be its policy to encourage warrantors to establish procedures whereby consumer disputes are fairly and expeditiously settled through informal dispute settlement mechanisms. (2) The Commission shall prescribe rules setting forth minimum requirements for any informal dispute settlement procedure which is incorporated into the terms of a written warranty to which any provision of this chapter applies. Such rules shall provide for participation in such procedure by independent or governmental entities.
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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT ________________________ FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT No. 00-12858 JUNE 28, 2001 ________________________ THOMAS K. KAHN CLERK D. C. Docket No. 00-00454-CV-J-S
MAURICE RICHARDSON, an individual, KAREN RICHARDSON, an individual,
Plaintiffs-Appellees,
versus
PALM HARBOR HOMES, INC., a corporation,
Defendant-Appellant. ________________________
Appeal from the United States District Court for the Northern District of Alabama _________________________ (June 28, 2001)
Before WILSON and COX, Circuit Judges, and RYSKAMP*, District Judge.
COX, Circuit Judge:
* Honorable Kenneth L. Ryskamp, U. S. District Judge for the Southern District of Florida, sitting by designation. Palm Harbor Homes, Inc., a retailer of mobile homes, appeals the district
court’s denial of its motion to compel arbitration of a breach-of-express-warranty
claim against it. We reverse and remand.
Background
Maurice and Sabrina Richardson bought a mobile home manufactured by Grand
Manor Homes, Inc. from Palm Harbor. Grand Manor issued them a one-year warranty
against defects in materials and workmanship. The mobile home proved on delivery
to be riddled with such defects, and the Richardsons immediately requested repair
under the warranty. Unsatisfied with the response, the Richardsons sued Palm Harbor,
Grand Manor, and Bombardier Capital, Inc., which financed their purchase, for breach
of written, express, and implied warranties.
Palm Harbor (as well as the other defendants) moved to compel arbitration of
the claims against it based on a predispute agreement, signed by Mr. Richardson at
closing, in which Mr. Richardson and Palm Harbor agreed to binding arbitration of
all disputes between them about the mobile home, including warranty disputes. The
Richardsons opposed Palm Harbor’s motion, in part because they believed that the
Magnuson-Moss Warranty Act (MMWA), 15 U.S.C. § 2310(a), voided their
predispute assent to arbitrate.
2 The district court agreed with the Richardsons in part, holding that the MMWA
prohibits arbitration of express-warranty claims. The court accordingly denied Palm
Harbor’s motion to compel arbitration of the express-warranty claims against it. The
court did, however, compel arbitration of the implied-warranty claims against Palm
Harbor.1
Palm Harbor appeals, invoking our jurisdiction under 9 U.S.C. § 16(a). (The
Richardsons have not invoked our pendent appellate jurisdiction to cross-appeal, and
the part of the order compelling arbitration is therefore not before us.) Palm Harbor
makes two alternative arguments: first, that the MMWA does not prohibit binding
arbitration at all; and second, that even if it did, it would not bar arbitration of the
specific claims that the Richardsons have made against Palm Harbor. These
arguments present legal issues about the arbitrability of certain claims, and we
consider them de novo. See Paladino v. Avnet Computer Techs., Inc., 134 F.3d 1054,
1060 (11th Cir. 1998) (Cox, J., joined by Tjoflat, J.).
1 The district court initially declined to compel Mrs. Richardson to arbitrate because she is not a party to the arbitration agreement. It later reversed that ruling, however, on the ground that Mrs. Richardson is a third-party beneficiary of the arbitration agreement. Mrs. Richardson has not appealed that ruling.
3 Discussion
The Federal Arbitration Act (FAA), 9 U.S.C. § 2, explicitly makes predispute
arbitration agreements presumptively enforceable if they “evidenc[e] a transaction
involving commerce,” which this one undisputedly does. Congress may, of course,
revoke this approval of arbitration agreements and “preclude a waiver of judicial
remedies for the statutory rights at issue.” Shearson/Am. Express, Inc. v. McMahon,
482 U.S. 220, 227, 107 S. Ct. 2332, 2337 (1987). Such an intent must be “‘deducible
from [the statute’s] text or legislative history’” or “from an inherent conflict between
arbitration and the statute’s underlying purposes.” Id., 107 S. Ct. at 2338 (quoting
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.
Ct. 3346, 3354 (1985) (alterations in Shearson)). No one argues that enforcing
predispute arbitration agreements “inherently conflicts” with a statute that regulates
consumer warranties, but the Richardsons contend — with support from at least two
courts — that the MMWA’s “text or legislative history” show an intent to override the
FAA and to render unenforceable predispute agreements to submit warranty disputes
to binding arbitration. See Wilson v. Waverlee Homes, Inc., 954 F. Supp. 1530, 1539
(M.D. Ala.) (Thompson, J.), aff’d without opinion, 127 F.3d 40 (11th Cir. 1997); S.
Energy Homes, Inc. v. Lee, 732 So. 2d 994, 999-1000 (Ala. 1999), overruled, S.
Energy Homes, Inc. v. Ard, 772 So. 2d 1131, 1135 (Ala. 2000); see also Cunningham
4 v. Fleetwood Homes of Ga., Inc., ___ F.3d ___, ___ (11th Cir. 2001) (a
manufacturer may not avail itself, as a third-party beneficiary, of a presale arbitration
agreement between the retailer and the consumer, when the warranty does not mention
the arbitration agreement).
The Richardsons’ and these courts’ reasoning relies on inferences from the
statute, its history, and interpretation of the Act by the Federal Trade Commission
(FTC). First, the statute provides a federal judicial forum for claims of breach of
written or implied warranties. See 15 U.S.C. § 2310(d); Wilson, 954 F. Supp. at 1537
(starting its analysis with the observation that the MMWA expressly provides a
federal cause of action). Second, the MMWA endorses, and makes enforceable,
provisions in written warranties requiring nonbinding dispute resolution, provided that
the informal procedures prescribed comply with regulations issued by the FTC. See
15 U.S.C. § 2310(a)(1)-(3)2; Cunningham, ___ F.3d at ___. The FTC’s regulations
2 The MMWA provides in pertinent part:
(1) Congress hereby declares it to be its policy to encourage warrantors to establish procedures whereby consumer disputes are fairly and expeditiously settled through informal dispute settlement mechanisms. (2) The Commission shall prescribe rules setting forth minimum requirements for any informal dispute settlement procedure which is incorporated into the terms of a written warranty to which any provision of this chapter applies. Such rules shall provide for participation in such procedure by independent or governmental entities. (3) One or more warrantors may establish an informal dispute settlement procedure which meets the requirements of the Commission's rules under paragraph (2). If-- (A) a warrantor establishes such a procedure, (B) such procedure, and its implementation, meets the requirements of such
5 under the Act that permit a warrantor to demand an effort at extrajudicial dispute
resolution, moreover, provide only for nonbinding proceedings. See 16 C.F.R. pt.
703. The FTC has indeed been explicit that its regulations “do[] not allow for”
binding alternative dispute resolution. Disclosure of Written Consumer Product
Warranty Terms and Conditions, 40 Fed. Reg. 60168, 60210 (December 31, 1975).
The provision of a federal claim for breach of some warranties and this strong
preference for nonbinding informal dispute resolution, according to the Richardsons
and the courts that subscribe to this reasoning, together spell prohibition of binding
arbitration of consumer warranty claims, notwithstanding the FAA.
But even these courts do not suggest that the statute and its history show that
Congress meant to supersede the FAA with respect to all consumer warranty claims.
See Boyd v. Homes of Legend, Inc., 981 F. Supp. 1423, 1437-38 (M.D. Ala. 1997)
(Thompson, J.) (MMWA supersedes FAA only with respect to claims of breach of a
rules, and (C) he incorporates in a written warranty a requirement that the consumer resort to such procedure before pursuing any legal remedy under this section respecting such warranty, then (i) the consumer may not commence a civil action (other than a class action) under subsection (d) of this section unless he initially resorts to such procedure; and (ii) a class of consumers may not proceed in a class action under subsection (d) of this section except to the extent the court determines necessary to establish the representative capacity of the named plaintiffs, unless the named plaintiffs (upon notifying the defendant that they are named plaintiffs in a class action with respect to a warranty obligation) initially resort to such procedure. 15 U.S.C. § 2310(a).
6 written warranty, not of unwritten express or implied warranties). The MMWA, after
all, has a “far more limited mission” than to become the “dominant regulator of
consumer product warranties.” Walsh v. Ford Motor Co., 807 F.2d 1000, 1013 (D.C.
Cir. 1986). It prescribes different federal limitations and regulations for different
kinds of warranties and leaves other warranty law untouched. The Act’s consumer-
suit provision, for instance, supplies a federal remedy for breach of written and
implied warranties, but not for oral express warranties, which remain the domain of
state law. See 15 U.S.C. § 2310(d)(1); see Walsh, 807 F.2d at 1015 (explaining why
Congress excluded oral express warranties from the consumer-remedy provision).
The Act prescribes content and minimum standards for written warranties, see 15
U.S.C. §§ 2302, 2304, but it is content to supplement state-law implied warranties
only by prohibiting their disclaimer in certain circumstances, see 15 U.S.C. § 2308,
and affording a federal remedy for their breach. Closer to our subject here,
furthermore, the Act’s preference for nonbinding dispute resolution, arguably to the
exclusion of binding arbitration, expressly applies only to dispute-resolution
mechanisms for which written warranties provide as a prerequisite to suit. See 15
U.S.C. § 2310(a)(2), (3) (“The [FTC] shall prescribe rules setting forth minimum
requirements for any informal dispute settlement procedure which is incorporated into
the terms of a written warranty. . . .”). Finally, the Act is arguably not universally
7 hostile to binding dispute resolution, at least not explicitly; the general policy is to
“encourage warrantors to establish procedures whereby consumer disputes are fairly
and expeditiously settled through informal dispute settlement mechanisms.” 15
U.S.C. § 2310(a)(1). The MMWA’s text and history may thus show that any
arguable restriction on agreements providing for binding arbitration reaches those
agreements relating to some kinds of warranties, for instance for written warranties,
Cunningham, slip op. at ___, but not others.
This suspicion of a limited restriction on arbitrability means that a first step in
arbitrability analysis is to pin down the nature of the claim. Often that is simple, but
it is not here because the complaint is vague. It begins with a proper and concise
recitation of the factual basis for all the Richardsons’ claims. But then it articulates
the claims, grouped in three counts, in a way that leaves it unclear who the defendants
are to each claim, and what exactly is the warranty that the Richardsons believe to
have been breached.
Count I, the most likely home of the express-warranty claim whose arbitrability
we are considering, alleges that a “Defendant expressly represented that said
manufactured home was free from defects in materials and workmanship” (R.1 ¶ 15),
and that “Defendants, Grand Manor and [Palm Harbor] have repeatedly failed and
refused to remedy the said defect after more than reasonable time and opportunities
8 to do so” (id. ¶ 16). This conduct, Count I says, “is in direct violation to [sic] the
written and oral representations of warranties under the Uniform Commercial Code
7-2-313 and is a breach of the express warranties given by the Defendants” (id. ¶ 17
(emphasis added)). One trait of the Count I claim is clear; it is brought under state
law, Alabama’s version of the Uniform Commercial Code’s express-warranty
provision, § 2-313, and not under the consumer-suit provision of the MMWA, 15
U.S.C. § 2310(d). If Count I’s language did not suffice to make its legal basis clear,
comparison to Count III would dispel all doubt. Count III, expressly titled
“Magnuson-Moss,” alleges that “Defendant has violated the Magnuson-Moss
Warranty Act, 15 U.S.C. 2301 et seq.” (Id. ¶ 25.) Count I’s omission of the MMWA
is thus telling.
But Count I does not clearly disclose who the “Defendant” who made the
warranty is, or how the warranty was made. For that information, we have to resort
to guesswork and inference by looking at the rest of the complaint. Two features
stand out. First, Count III — the Magnuson-Moss claim — also alleges a breach of
an express warranty, but it is plainly against Grand Manor alone. Although Count III,
like Count I, alleges only that an unidentified “Defendant” made a warranty, it
explicitly mentions only Grand Manor’s written warranty, and then its ad damnum
clause limits its basis to “Defendant Grand Manor’s conduct.” (Id. ¶ 28.) Count II
9 does not mention express warranties at all. If this complaint indeed contains an
express-warranty claim against Palm Harbor — and the parties and the district court
all seem to think that it does — it must be the one in Count I, and Palm Harbor must
therefore be the “Defendant” who made the alleged representation. Second, the only
warranty that the complaint specifically identifies anywhere is the written one issued
by Grand Manor. That is the only one that Count I, by its unhelpful clause that
“adopts and re-alleges all of the above allegations” (id. ¶ 14) refers to. Because Grand
Manor is the only warrantor under the written agreement, it appears that in Count I the
Richardsons are seeking to hold Palm Harbor liable for breach of some oral express
warranty that the complaint simply does not describe, notwithstanding the enigmatic
reference to “written . . . representations of warranties.” (Id. ¶ 17.) Because of these
features of the complaint, we conclude that the only express-warranty claim against
Palm Harbor, and thus the only claim whose arbitrability we are considering, is a
claim under Alabama’s UCC for breach of an oral express warranty. The district court
did not determine whether the Count I claim against Palm Harbor was for breach of
written or oral express warranty, and our conclusion does not therefore conflict with
the district court’s reading of the complaint.
That kind of state-law claim is simply outside any superseding scope of the
MMWA. As explained above, if the MMWA supersedes the FAA at all for any
10 claims, it is by the negative implication of the MMWA’s provisions and history
approving and regulating the prescription of nonbinding, as opposed to binding,
extrajudicial dispute resolution. See Cunningham, slip op. at ___. That regulation
of nonbinding dispute resolution is limited to provisions in written warranties. See
15 U.S.C. § 2310(a)(2), (3). The House report’s explanation of the policy behind this
provision, too, focuses on “informal dispute settlement procedure which is
incorporated in any written warranty,” H.R. Rep. No. 93-1107 (1974), reprinted in
1974 U.S.C.C.A.N. 7702, 7722. The FTC’s implementing regulations follow suit,
addressing only the requirements for dispute-resolution provisions in written
warranties. See 15 C.F.R. § 704.2(a). The negative inference we can draw from this
about Congress’s intent with regard to arbitration of state-law oral express warranty
claims is thus very weak. The FTC’s own conclusions about Congress’s intent do not
draw any inference about arbitration of any claims other than ones based on written
warranties; the FTC has explained that it “examined the legality and the merits of
mandatory binding arbitration clauses in written consumer product warranties when
it promulgated Rule 703,” which prescribes standards for nonbinding dispute
resolution mechanisms that warrantors may impose as preconditions to a court action,
and concluded only that Congress did not wish to permit warrantors to demand
binding arbitration as a condition of a written warranty. Final Action Concerning
11 Review of Interpretations of Magnuson-Moss Warranty Act, 64 Fed. Reg. 19700,
19708 (Apr. 22, 1999) (emphasis added). Thus, even if the text and history of the
MMWA could imply a silent supersedure of the FAA with respect to warranty claims,
no such inference could fairly extend to a state-law claim for breach of an oral express
warranty. Refusing to rely on these weak inferences about oral express warranties
makes sense, moreover, given that the overwhelming focus of the drafters of the
MMWA was dispelling the deceit that was then common in manufacturers’ written
warranties on new products, not to ensure that consumers had exclusively judicial
remedies when they were misled by oral representations by retailers. See H.R. Rep.
No. 93-1107 (1974), reprinted in 1974 U.S.C.C.A.N. 7702, 7705-7711 (describing the
widespread abuse by manufacturers in the issuing and honoring of written warranties).
The FAA thus still governs the arbitrability of the Richardsons’ oral express
warranty claim against Palm Harbor. It makes agreements to arbitrate “valid,
irrevocable, and enforceable” absent “such grounds as exist at law or in equity for the
revocation of any contract.” 9 U.S.C. § 2. The Richardsons did advance one such
ground, unconscionability, before the district court, but the district court rejected it
after detailed briefing. That decision goes unchallenged here. The Richardsons make
only an impassioned argument that arbitration is bad for the Richardsons, as for all
consumers, because it does not provide an adequate remedy. The Richardsons do not,
12 however, explain in any detail why an arbitrator could not award them full relief.
Indeed, the opposite would seem to be true for a dispute of this simplicity. Under the
FAA, the arbitration agreement must be enforced.
Conclusion
For the foregoing reasons, the district court’s order refusing to compel
arbitration of the express-warranty claim against Palm Harbor is reversed, and we
remand for the district court to enter an order compelling the Richardsons to arbitrate
that claim.
REVERSED AND REMANDED WITH INSTRUCTIONS.