STEPHEN DYE, on behalf of themselves and all others similarly situated, DOUGLAS BOHN, on behalf of themselves and all others similarly situated, Plaintiffs - Appellants, versus TAMKO BUILDING PRODUCTS, INC., Defendant - Appellee.
No. 17-14052
United States Court of Appeals, Eleventh Circuit
November 2, 2018
D.C. Docket No. 8:17-cv-00590-MSS-AEP [PUBLISH]
NEWSOM, Circuit Judge:
You’ve undoubtedly heard of—and for that matter probably accepted the terms of—a “shrinkwrap” agreement, which binds a software (or small-electronics) purchaser to an inside-the-box contract if she opens the product and retains it for some specified time. In this cyber age, you’ve also almost certainly assented to the terms of a “clickwrap” or “scrollwrap” agreement—for instance, by hitting “I accept” when installing the latest operating system for your smartphone. This case—not quite as hip but governed by the same basic principles—requires us to determine the enforceability of what, for lack of a better label, we’ll call a “shinglewrap” agreement.
Boiled to its essence, the question we must decide is this: Where a roofing shingle manufacturer displays on the exterior wrapping of every package of shingles the entirety of its product-purchase agreement—including, as particularly relevant here, a mandatory-arbitration provision—are homeowners whose roofers ordered, opened, and installed the shingles bound by the agreement’s terms? Applying Florida law, we conclude that the homeowners are bound—and must therefore arbitrate any product-related claims that they allege against the manufacturer. In particular, we hold (1) that the manufacturer’s packaging here sufficed to convey a valid offer of contract terms, (2) that unwrapping and
I
A
Tamko Building Products is a Missouri-based roofing company.1 Its “Heritage 30” shingles come with (appropriately) a 30-year limited warranty, which is printed—in full—on the outside wrapper of every shingle package. Although most of the warranty is set in ordinary Roman type, several key portions—including those most significant to this appeal—are rendered in a more conspicuous font. Each package wrapper, for instance, displays the all-capped word “IMPORTANT” and warns the purchaser—again in all caps—to “READ CAREFULLY BEFORE OPENING [THE] BUNDLE.” The wrapper further explains (1) that the consumer must notify Tamko of any warranty-related claims “within thirty (30) days following discovery of the problem with the Shingles” and (2) that the warranty and other purchase terms are available not only on the face of the wrapper itself but also on Tamko’s website and via a toll-free telephone number.
MANDATORY BINDING ARBITRATION: EVERY CLAIM, CONTROVERSY, OR DISPUTE OF ANY KIND WHATSOEVER (EACH AN “ACTION”) BETWEEN YOU AND TAMKO (INCLUDING ANY OF TAMKO’S EMPLOYEES AND AGENTS) RELATING TO OR ARISING OUT OF THE PRODUCT SHALL BE RESOLVED BY FINAL AND BINDING ARBITRATION, REGARDLESS OF WHETHER THE ACTION SOUNDS IN WARRANTY, CONTRACT, STATUTE, OR ANY OTHER LEGAL OR EQUITABLE THEORY.
The warranty further specifies that any action against Tamko must be arbitrated individually rather than as part of a consolidated or class action:
ANY ACTION BROUGHT BY YOU AGAINST TAMKO WILL BE ARBITRATED (OR, IF ARBITRATION OF THE ACTION IS NOT PERMITTED BY LAW, LITIGATED) INDIVIDUALLY AND YOU WILL NOT CONSOLIDATE, OR SEEK CLASS TREATMENT FOR, ANY ACTION UNLESS PREVIOUSLY AGREED TO IN WRITING BY BOTH TAMKO AND YOU.2
B
Enter Douglas Bohn and Stephen Dye. Both are Florida residents whose homes are fitted with Tamko’s Heritage 30 shingles. Bohn hired Duffield Home Improvements to install a new roof on his Middleburg, Florida home. After a few
Bohn and Dye filed a putative class action seeking damages and declaratory relief on behalf of a class of building owners who had used Tamko shingles. Their complaint alleged that Tamko manufactured its Heritage 30 shingles with less asphalt than necessary to comply with industry standards and building codes, which caused the shingles to crack and split. The complaint included claims for breach of express and implied warranties, strict products liability, negligence, and violations of the Florida Deceptive and Unfair Trade Practices Act. In response, Tamko filed a motion to compel arbitration and an accompanying motion to dismiss or stay court proceedings. Tamko contended that by unwrapping and retaining its shingles the homeowners had accepted the terms of its purchase agreement and were thus bound, pursuant to the agreement’s plain terms, to arbitrate their claims.
The district court granted Tamko’s motion and dismissed the homeowners’ complaint. The court reasoned that the homeowners were bound to arbitrate because through their roofers, whom they had hired to buy and install the shingles,
II
On appeal, we must determine whether Tamko’s warranty-emblazoned shingle wrappers set forth a valid offer that gave purchasers an adequate opportunity to assent to its terms—most notably, the mandatory-arbitration clause—and, if so, whether the roofers, as the homeowners’ agents for the purposes of purchasing and installing shingles, bound the homeowners to arbitrate by unwrapping the shingle packages. We consider each issue in turn.3
A
First up, we consider whether the shingle wrappers conveyed a valid offer of Tamko’s contract terms—in particular, that any product-related dispute must be arbitrated rather than litigated. Of course they did, Tamko says, asserting that the law is well-settled that opening and retaining a product constitutes acceptance of terms printed on the product’s packaging. The homeowners, by contrast, contend that consumers aren’t on notice that shingles come wrapped in purchase terms and can’t assent to terms of which they are unaware. The nub of the dispute is whether
Florida law provides the rules of decision here.4 Applying Florida law, we recently held that “[a] valid contract—premised on the parties’ requisite willingness to contract—may be ‘manifested through written or spoken words, or inferred in whole or in part from the parties’ conduct.’” Kolodziej v. Mason, 774 F.3d 736, 741 (11th Cir. 2014) (quoting L & H Constr. Co. v. Circle Redmont, Inc., 55 So. 3d 630, 634 (Fla. 5th Dist. Ct. App. 2011)); see also
These settled principles give rise to two fundamental inquiries: (1) Would “a reasonable, objective person” have understood an offer as an “invitation to contract,” and (2) did that person’s “words and acts, judged by a reasonable standard, manifest an intention to agree?” Kolodziej, 774 F.3d. at 741–42 (quotation omitted). In considering these questions, a court must examine the content of the offer, the circumstances in which the offer was made, and the conduct of the parties—all the while keeping firmly in mind that “[t]he law imputes to a person an intention corresponding to the reasonable meaning of his words and acts.” Id. at 742 (quoting Lucy v. Zehmer, 84 S.E.2d 516, 522 (Va. 1954), “the classic case describing and applying what we now know as the objective standard of assent”).
As particularly relevant here, courts applying Florida law have recognized that a vendor’s prerogative to specify conduct that constitutes acceptance includes inviting acceptance by unwrapping a product. Take, for instance, TracFone Wireless, Inc. v. Pak China Group Co. Ltd., a shrinkwrap case cited extensively by both parties. There, a cellphone manufacturer’s retail packaging displayed “conspicuous language” specifically “restricting the use of the Phones for
This case is cut from the same cloth. Tamko’s purchase terms were printed in full on the exterior of every package of shingles, accompanied by text alerting purchasers of an “IMPORTANT” message that they should “READ CAREFULLY BEFORE OPENING [THE] BUNDLE.” The agreement required consumers to notify Tamko “within thirty (30) days following discovery of the potential problem
The homeowners acknowledge that Florida law recognizes “shrinkwrap” contracting but contend that the nature of the product here calls for a different analysis. It’s a fair point. Software packaging of the sort typically involved in a shrinkwrap case is fairly small, usually delivered directly to (and sometimes retained by) the end user, and often includes at least some notice of terms printed both on the outside and inside of the package. By contrast, shingle packages are large and unwieldy, are often delivered to contractors rather than end users, are quite unlikely to be kept following installation, and in this case sported terms
To be sure, there are distinctions between small-box and big-box items, but those distinctions neither alter the underlying principles nor require a different result. Indeed, they arguably cut in different ways. On the one hand, for instance, it’s surely true that a consumer (or his agent—more on that below) is less likely to keep shingle packaging than software packaging after unwrapping the product. On the other hand, one of the things that has historically made shrinkwrap cases tricky is that the full purchase terms “are typically provided inside the packaging of consumer goods,” while the outer packaging bears only a notice or excerpt of those terms—leading courts to hold that valid acceptance occurs not upon purchase or opening, but rather only upon the purchaser’s “failure to return the product after reading, or at least having a realistic opportunity to read, the terms and conditions of the contract included with the product.” Schnabel v. Trilegiant Corp., 697 F.3d 110, 121–22 (2d Cir. 2012) (emphasis added).6 Here, by contrast—in the
Moreover, and in any event, that big-box items come with purchase terms and conditions should hardly come as a surprise to modern consumers. Post-purchase, acceptance-by-retention warranties are ubiquitous today—think furniture, home appliances, sporting goods, etc. It’s not only objectively reasonable to assume that such items come with terms and conditions, it’s also eminently reasonable to assume that by opening and retaining those items a consumer necessarily accepts the accompanying terms and conditions. See Kolodziej, 774 F.3d at 742 (“[T]he law imputes to a person an intention
Indeed, this expectation—and with it, fair notice—has been building for some time. More than 20 years ago, in Hill v. Gateway 2000, 105 F.3d 1147 (7th Cir. 1997), the Seventh Circuit rejected a suggestion that its earlier decision in ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996)—the seminal case on shrinkwrap contracts—applied only to software, for precisely this reason. See Hill, 105 F.3d at 1149 (“ProCD is about the law of contract, not the law of software.”). The Hill court explained that “[p]ractical considerations support allowing vendors to enclose the full legal terms with their products,” employing a “simple approve-or-return” model in place of a “costly and ineffectual” requirement that sellers narrate their terms of purchase “telephonic[ally].” Id. When it comes to warranties and other purchase terms, the Hill court explained, “[c]ompetent adults are bound by such documents, read or unread.” Id; see also id. at 1148 (“A contract need not be read to be effective; people who accept [the contract] take the risk that the unread terms may in retrospect prove unwelcome.”).
All of that applies a fortiori two decades hence, in the age of Amazon Prime. As fewer and fewer purchases are consummated face to face, and more and more are made online, consumers should (and must) know that vendors will often employ a “simple approve-or-return” model, enclosing their full legal terms with a
That’s not to imply that consumers can’t choose to seek out purchase terms by other means should they so choose. Indeed, one key reason that the Hill court rejected the “I-didn’t-read-it” excuse was that consumers could discover the terms of their desired purchases in one of several ways, such as by “ask[ing] the vendor to send a copy before deciding whether to buy,” by “consult[ing] public sources (computer magazines, the Web sites of vendors),” or by “inspect[ing] the documents after the product’s delivery.” 105 F.3d at 1150. And of course, as we have emphasized, the same is true here—Tamko’s purchase terms were available not only on its packaging but also on its website and over the phone, such that a diligent consumer could easily have discovered and reviewed them before or after purchase.
At the end of the day, the point is simply this: modern consumers are on notice that products come with warranties and other terms and conditions of
We can summarize using what this Court has referred to as the “million-dollar question” in evaluating assent: “What did the part[ies] say and do?” Kolodziej, 774 F.3d at 743. By conspicuously printing its purchase terms on its shingle wrappers, Tamko made a valid offer in accordance with Florida law. As master of that offer, Tamko was free to invite acceptance by specified conduct, and it did—inviting consumers to accept by opening the shingles and retaining them for more than 30 days. By doing exactly this, the homeowners here “accept[ed] by performing” the acts that Tamko “propose[d] to treat as acceptance,” thus “manifest[ing] an intention to agree.” TracFone, 843 F. Supp. 2d at 1298; Kolodziej, 774 F.3d at 742. We therefore hold that Tamko made a valid offer—
B
Hang on just a minute, the homeowners contend: Even if this was a valid means of making an offer, they didn’t accept it—their roofers did. After all, the homeowners say, they never saw the shingle packaging and thus never had a reasonable opportunity to consider Tamko’s purchase terms—arbitration clause included—so they can’t possibly be bound by them. Attributing the roofers’ acceptance to them would be, the homeowners assert, an “ill-advised” and “unsupported” expansion of agency law. We disagree. Imputing the roofers’ notice and acceptance of Tamko’s purchase terms to the homeowners requires no expansion, but rather fits squarely within established agency-law principles and precedent.
Let’s start with the basics. “[A]n agency relationship requires (1) the principal to acknowledge that the agent will act for it; (2) the agent to manifest an acceptance of the undertaking; and (3) control by the principal over the actions of the agent.’” Franza v. Royal Caribbean Cruises, Ltd., 772 F.3d 1225, 1236 (11th Cir. 2014) (quotation omitted). Importantly here, we have further held—applying Florida law—that a grant of agency authority also necessarily implies “the authority to do acts that are ‘incidental to it, usually accompany it, or are
This case is similar. Neither party seriously disputes that the roofers were the homeowners’ agents for purposes of purchasing and installing shingles. Both homeowners expressly delegated those tasks to their roofers, their roofers accepted those tasks by signing contracts, and the homeowners maintained control over their roofers’ completion of those tasks pursuant to those contracts. See Franza, 772 F.3d at 1236. The question, then, is whether accepting Tamko’s purchase terms—including an arbitration provision—was “incidental to,” “usually accompany[ing],” or “reasonably necessary to accomplish” the purchase and installation of the shingles. See Delray Beach, 622 F.3d at 1342–43.
We think the homeowners are missing the point. Accepting the purchase terms is not “any other contract . . . regarding those shingles”—it is the contract regarding those shingles. Purchasing a product necessarily and by definition encompasses accepting the terms of that purchase. The homeowners here expressly delegated to their roofers the task of purchasing shingles, and yet they now contest terms—in particular, those requiring mandatory arbitration—that are part and parcel of that purchase. In the language of our precedent, accepting purchase terms is “incidental to,” “usually accompany[ing],” and “reasonably necessary to” the act of purchasing. And Florida law is clear that, in this respect at least, arbitration terms are no different from any others: “[A]n agent can bind
Even aside from our “incidental-to” precedent, it is axiomatic under Florida law—and more generally—that knowledge or notice that an agent acquires while acting within the course and scope of his authority is generally imputed to his principal. See, e.g., Chang v. JPMorgan Chase Bank, N.A., 845 F.3d 1087, 1095 (11th Cir. 2017); Restatement (Third) Of Agency § 5.03 (“For purposes of determining a principal’s legal relations with a third party, notice of a fact that an agent knows or has reason to know is imputed to the principal if knowledge of the fact is material to the agent’s duties to the principal[.]”). Here, Tamko’s purchase terms were printed on the shingle packaging, which the homeowners agree their roofers opened. Because the notice that their roofers acquired while acting within the scope of their authority to purchase and install the shingles is properly imputed to them, the homeowners cannot now plead ignorance of the offer’s existence.
To summarize, then, acceptance of Tamko’s purchase terms—arbitration clause and all—was incidental to, and reasonably necessary to accomplish, the
III
As “master of the offer,” Tamko invited purchasers to accept its contract terms by opening and retaining the shingles—a reasonable means of acceptance-by-conduct under Florida law. The homeowners, through their roofer agents, validly accepted those terms—Tamko’s binding arbitration provision included. We therefore affirm the district court’s decision to grant Tamko’s motion to compel arbitration and to dismiss the homeowners’ complaint.
AFFIRMED.