Thomas E. Walton Le'ellen Walton v. Rose Mobile Homes Llc, Southern Energy Homes, Inc.

Homes, Energy agency final ac- Southern rulings after procedural Defendant-Appellant. preliminary, “A states: APA tion. The action agency intermediate ;procedural, No. 00-60742. subject is reviewable directly ruling not agency of the final review review Appeals, Court of United States added). (emphasis § 704 5 U.S.C. action.” Fifth Circuit. held that Furthermore, previously we have July agency review board’s an can review we final after the to an ALJ order remand v. Mijangos rendered. is

agency decision Inc., 948 F.2d Shipyards, Avondale Cir.1991) (5th that the fact (explaining juris- “[tjhat had no previously this Court remanding order diction to review the not mean that this ALJ] does case [to order”). If may never review Exxon, Exxon will against the ARB rules challenge opportunity to adequate have decision, as well as both the ARB’s final order. of its remand As propriety effectively re- such, ARB’s action agency from the final appeal viewable on the collateral or- under order and review inappropriate. der doctrine we GRANT the foregoing, Given peti- to dismiss Exxon’s Secretary’s motion jurisdiction. lack review for tion for WALTON; Le’Ellen Thomas E. Walton, Plaintiffs-

Appellees, LLC; HOMES ROSE MOBILE Defendants, al., et

Amanda Lee Trawick (argued), John Compton, Gibson Witherspoon & Comp- ton, Meridian, MS, for Plaintiffs-Appel- lees. Quinn

James L. (argued), Zachary & Leggett, MS, Hattiesburg, Robert Emmett Kerrigan, (argued), Jr. Clay McGehee, W. Deutsch, Isaac H. Ryan, Kerrigan & Stiles, Orleans, LA, New Wayne Scott Simpson, Southern Energy Homes AL, Birmingham, for Defendant-Appel- lant. KING,

Before Judge, Chief and JOLLY GARZA, and EMILIO M. Judges. Circuit JOLLY, E. GRADY Judge: Circuit Defendantr-Appellant Energy Southern Homes, Inc. appeals the district court’s denial of its motion to compel arbitration of Waltons’ claim for breach of express warranty under the Magnuson- Act, Moss Warranty §§ 15 U.S.C. reasons, For following we RE- VERSE and REMAND.

I

In January Plaintiffs-Appellees (“the Thomas and Le’Ellen Walton Wal- tons”) purchased a mobile home manufac- tured DefendanL-Appellant Southern Homes, (“Southern Energy Inc. Energy”) seller, from a retail Rose Mobile Homes (“Rose”). Energy Southern issued the one-year Waltons a manufacturer’s war- ranty against defects in materials and workmanship. This warranty contained an signed by Agreement” Thomas Arbitration the Waltons requiring valid and of sale are at the time under the Walton any claims to submit Arbitration the Federal enforceable under arbitration.1 “FAA”) (the respect to all of the Act variety of de- discovered The Waltons In the response, claims. Waltons Waltons’ They request- home. mobile fects in their the en- precludes argued that the MMWA Energy and from both Southern repairs ed binding provisions arbitration forcement of occasions, these but numerous Rose on written warranties. express contained to the Wal- completed were repairs never that, maintained because The Waltons in Octo- Consequently, satisfaction. tons’ neither their statutory prohibition, this accep- revoked their the Waltons ber nor under the warranty claims MMWA home letter. of the mobile tance subject law claims are state their related Waltons December the mag- A arbitration. federal compulsory to Energy and Southern against filed suit with the and judge agreed Waltons istrate Kemper in the Circuit Rose2 and mo- Energy Rose’s denied Southern alleging negligence, County, Mississippi, respect to compel arbitration with tions to contract, and express breach of breach claims. all of the Waltons’ warranties, the and implied violation (the Warranty Act Magnuson-Moss magistrate judge’s the Upon review “MMWA”).3 the removed The defendants order, with the agreed district court to pursuant court case to federal district magistrate judge’s conclusion § and § 28 U.S.C. U.S.C. (the precludes Energy MMWA Southern jurisdictional provision, the MMWA’s warrantor) requiring the Waltons to from 2310(d). § U.S.C. warranty claims submit their written mag- Contrary to the filed arbitration. Energy Rose Both Southern conclusion, however, judge’s istrate arbitration of the Wal- compel motions compelled court arbitration that the ar- district They contended tons’ claims. arise under that did not warranty and claims Waltons’ bitration Thus, court or- the district “Binding the MMWA. separate and the sales contracts Greenpoint Finan- also named a 2. The Waltons contract also contained 1.The sales (the "[A]ny company con- Corporation that financed stated: cial lawsuit, arising relating troversy of or or claim ... out purchase) a defendant as any agreements or instru- Contract or home arguing the failure of the mobile relating in connection to or delivered ments gives a defense to purchase the Waltons ... shall ... determined with this Contract against Greenpoint’s claim them. secured arbitration, reference, by judge as or a trial not before this court. This issue is involving only controversy provided A below. claimant, single claimants are relat- a or who governing standards 3. The establishes arising single asserting ed or transaction, claims from warranties, product the content of consumer by arbitra- shall be determined §§ creates see 15 U.S.C. [pursuant to the Federal Arbitration tion legal remedy who are for consumers apart Separate and from Act].” comply by a warrantor's failure to harmed contract, Walton also the sales Thomas warranty, obligations in a established Agreement” at signed “Binding Arbitration parties agree Both see id. agreement "All This stated: time of sale. applicable provisions are MMWA’s arising resulting out of disputes ... from at issue. transaction manufacture, warranty repair design, submit- home ... will be the manufactured [pursuant to ted to BINDING ARBITRATION Act].” the Federal Arbitration dered the negli- 220, 225-26, Waltons submit their U.S.

gence, breach of contract breach of L.Ed.2d 185 (quoting Scherk v. Al- implied warranty Co., claims to arbitration.4 berto-Culver Energy appeals (1974)) Southern now (internal the district S.Ct. 41 L.Ed.2d 270 court’s denial of its motion to compel citations and quotations omitted, arbi- altera- tration of the Waltons’ original). MMWA claim. tions in provides FAA that:

A written provision in ... a contract II evidencing a transaction involving com- merce to settle by arbitration a contro- We review a grant district court’s versy thereafter arising out such con- or denial of a compel motion transaction, tract or or the refusal to Inc., de novo. Investacorp, Webb v. perform the any whole or part thereof (5th Cir.1996). F.3d We have valid, ... irrevocable, shall be and en- determined that a two-step inquiry gov forceable, upon save grounds such as adjudication erns the of motions to compel exist law in equity at or for the revoca- arbitration under the FAA: “The step first any tion of contract. is to determine parties agreed whether (1994). 2§ U.S.C. arbitrate the question.... The second step to determine whether There is a “liberal policy federal legal constraints external parties’ arbitration,” favoring and agreement foreclosed arbitration of Court read the has FAA to establish a (internal those claims.” Id. at 257-58 cita presumption in favor of the enforceability omitted). tions and quotations Because of contractual agreements. arbitration party neither disputes that the warranty Moses H. Cone Mem’l Hosp. v. Mercury contains a valid agreement arbitration Corp., 1, 24-25, Constr. 460 U.S. encompasses the breach Waltons’ of ex 927, 74 L.Ed.2d 765 The presump press claim, warranty we focus our atten tion of enforceability of agree arbitration tion on step the second of the Webb inqui ments equally applies to “claim[s] founded ry: whether the presents a legal statutory McMahon, rights.” constraint forecloses arbitration of the at 107 S.Ct. 2332. Only a contrary express warranty claim. congressional command can override the dictates of the FAA. Id.

We first background consider the Act, dictates of the Federal Arbitration In order to pre overcome this and then of the Magnuson-Moss Warranty sumption arbitration, in favor of party Act. opposing arbitration bears the burden of demonstrating “Congress intended to A preclude judicial a waiver of remedies for The Federal Arbitration Act was enact- the statutory rights at issue.” Id. (citing ined 1924 to judi- centuries “revers[e] Motors Corp. Mitsubishi Soler Chrys v. hostility cial agreements arbitration ler-Plymouth, plac[ing] agreements upon (1985)). the S.Ct. 87 L.Ed.2d 444 Courts footing same as other contracts.” consider Shear- three factors determining Express son/Am. Inc. whether preclude intended to ap- 4. Because express Rose issued no cordingly, Energy only Southern is the re- Waltons, warranty against all claims maining defendant in this action. subject Rose were deemed Ac- arbitration. warrantor, or supplier, failure of a by the statu- particular FAA to

plication (2) any obli- comply with text; contractor service the statute’s tory right: there [established whether [imposed Act] history; gation warranty, warranty, implied between conflict by] a written is “an inherent 2310(d)(1).11 underlying purposes.” § the statute’s Id. service contract.” may brought Id. under the MMWA Suits court, id., and con- or state either federal has Supreme Court every case reason- to recover permitted are sumers right involving a considered includ- arbitration, expenses, ably-incurred costs explicitly does fees, in such they prevail FAA. if attorneys’ application ing upheld 2310(d)(2). Age falling under cases Id. This includes suits. Act,5 Sher- in Employment

Discrimination breach of a suit for bringing Before and Cor- Act,6 Influenced Racketeer man persons must warranty, give the consumer Act of Act,7 Securities rupt Organization reasonable under the obligated 1934,9 Act Exchange 1933,8 Securities to com- their failure to “cure” opportunity Lending Act.10 and the Truth Id. issue. obligations with the ply 2310(e). permits also war- § The MMWA B dispute set- “informal to establish rantors turn to the We now written for breach of procedures” tlement Act Warranty Magnuson-Moss claims, consum- require and to warranty (“MMWA”). was enacted The MMWA before procedures resort to such ers to of informa- adequacy “improve the 1974 to 2310(a). § a civil action.12 Id. bringing consumers, decep- prevent to tion available dispute settle- “informal the term While mar- competition tion, improve anywhere is not defined procedure” ment 15 U.S.C. products.” consumer keting of Act, Trade the Federal text of establishing 2302(a). In addition § “FTC”) (the is instructed Commission war- the content of governing standards re- forth setting rules minimum “prescribe ranties, creates MMWA set- dispute informal any quirements “damaged consumers action for cause of Attorney empowers the MMWA Corp., 11. The also 500 Lane v. 5. Gilmer Interstate/Johnson 1647, 26 Commission 114 L.Ed.2d and the Federal Trade 111 S.Ct. General U.S. warranty (1991). deceptive proceedings for to initiate noncompliance requirements with the 628-40, Motors, 105 U.S. at 473 6. Mitsubishi 2310(c). § See 15 the Act. U.S.C. S.Ct. 3346. governing provisions of the MMWA 242, 12. The McMahon, 2332 U.S. at 107 S.Ct. 482 7. ap- procedures dispute settlement claims). (civil informal RICO brought only pear applicable to claims to be Quijos Ex- de Rodriguez 8. Shearson/Am. See 15 warranties. pursuant to written U.S. 109 press, 490 (1994) ("The 2310(a)(2) Commission § U.S.C. (1989), overruling Wil- 526 L.Ed.2d 104 setting minimum prescribe rules forth shall Swan, 74 S.Ct. ko v. dispute settle- any requirements for informal (1953). L.Ed. 168 incorporated into procedure which is ment warranty any to which terms of written 2332. 9. (emphasis chapter applies.”) provision of this Corp.-Alabama v. Financial Tree Green added). 79, 88-92, 121 S.Ct. Randolph, 148 L.Ed.2d procedure tlement which incorporated is the law and must be given effect.” Id. at warranty.” 9,104 into the terms of a written Id. 843 n. S.Ct. 2778. 2310(a)(2). § If a warrantor establishes There is no doubt that Congress has informal settlement procedure expressed a clear intention favor of rules, in accordance FTC arbitration for contractual claims. See 9 permitted

warrantor lan- include (“A § U.S.C. written provision in any guage warranty requiring consum- maritime transaction or a contract evidenc- ers to resort procedure “before ing transaction involving commerce to any pursuing legal remedy” under settle arbitration a controversy thereaf- 2310(a)(3)(C). § Act. Id. The FTC ter out of arising such contract or transac- adopted a regulation stating that informal tion, or the perform refusal to the whole or dispute settlement procedures under the thereof, any part or an agreement in writ- cannot legally any ing to submit arbitration an existing person. 703.5(j). See C.F.R. controversy arising contract, out of such a FTC therefore has found that written transaction, refusal, valid, shall be irre- warranties cannot require binding arbitra- vocable, enforceable, upon save such tion. 40 Fed. Reg. grounds exist at as law or in equity for the (“[T]here is nothing in the Rule which revocation of any contract.”) We there- precludes the use of any other remedies fore must determine if Congress expressed parties following a Mechanism de- any contrary intent with respect to such However, .... cision reference within the arising claims under the MMWA. any binding, non-judi- remedy cial prohibited by the Rule and A .. Act.”) Thus, the according to the FTC’s McMahon, Under in order to determine interpretation, binding arbitration is sim- if Congress intended to preclude arbitra- ply impermissible under the MMWA. claim, tion of a statutory we consider the text, statute’s legislative history, and its

Ill McMahon, purpose. 226, 482 at U.S. 107 When we review an agency’s con S.Ct. 2332. The text of the MMWA does struction of a administers, statute that it specifically not address arbitra- must we defer to agency’s tion, that interpreta nor it specifically does allow the FTC (1) tion of the statute if: Congress has not to decide whether permit to or to ban spoken directly issue; the binding arbitration. Although MMWA agency’s interpretation “is per based on a allows warrantors' to require that consum- “informal, missible construction statute.” ers use dispute pro- settlement U.S.A., Chevron Inc. v. Natural Resources cedures” filing court, a before suit Council, Inc., 837, 843, 467 U.S. allows the FTC to govern- establish rules Defense 104 S.Ct. 81 L.Ed.2d 694 ing procedures, these it not does define “The judiciary is the final authority on “informal dispute procedure.” settlement of statutory issues construction However, and must the MMWA does make clear reject administrative constructions which that these are to be used filing a before contrary are to clear congressional in claim in court. Yet binding arbitration court, ... tent. If a employing generally traditional is understood to a substitute construction, tools of statutory lawsuit, ascertains for filing a not a prerequisite. See that had intention on the Corp. Mitsubishi Motors v. Chrys- Soler precise issue, question at intention is ler-Plymouth, 105

476 precluding for is no basis judicial forum (“By L.Ed.2d

S.Ct. the MMWA. claim, claims under a arbitration a to arbitrate agreeing rights the substantive forgo not does party also note We statute; only it submits by the afforded an “informal to be normally considered not arbitral, than rather in an their resolution and it procedure,” dispute settlement forum.”) judicial, a outside the bounds to fall therefore seems power the FTC’s and of of MMWA Lane In Gilmer Interstate/Johnson thus conclude regulations. We prescribe Corp., not does the text of the MMWA that the held the Court L.Ed.2d 26 prevent intent congressional a evince Act Employment Age Discrimination binding arbitration. the use of (“ADEA”) compulsory preclude does claims, though even ADEA B pursue EEOC the ADEA allows “ history legislative conciliation, next consider the confer- We ‘informal methods ” history legislative The the MMWA. 111 of Id. at ence, persuasion.’ 626(b)). availability discuss specifically does not 29 U.S.C. (quoting S.Ct. arbitration, or shed nor define does informal availability of Therefore meaning of “informal light on the does dispute plainly settling methods of The procedure.” availability arbi- settlement preclude not itself procedures such history does indicate that Further, fact that the MMWA tration. For exam- non-binding. meant to be claims were judicial forum MMWA creates a Report on ple, in- the House congressional evidence is insufficient any decision adverse “[a]n FAA. states application tent procedure dispute settlement informal See civil action on not be a bar of the Secu- would (finding proceeding....” warranty involved stating that dis- “[t]he Act Exchange rities (1974),reprinted in Rep. H.R. No. 93-1107 ... shall of the United States trict courts Con- 1974 U.S.C.C.A.N. of violations of jurisdiction exclusive have also indicates report ference Committee regulations the rules this title or pursue to chooses not that a consumer thereunder, equity in if of all suits procedure, dispute settlement any lia- an informal to enforce brought at law actions “all alternative pursue can still not a consumer by this title” did created bility duty or Rep. of redress.” S. Conf. No. to claims of the FAA avenues application preclude (1974), 1974 statute) reprinted (quoting brought under However, there Gilmer, 7758. 78aa); U.S.C.C.A.N. U.S. U.S.C. Congress no evidence that intended is still (rejecting argument 111 S.Ct. 1647 an considered binding arbitration arbitration under compulsory procedure. dispute settlement statute informal because the ADEA is improper any informal forum); the fact that dis- judicial Therefore provides claimants with must be non- pute procedure settlement Epstein, Indus. Co. Elec. Matsushita Congress not binding, imply does 367, 385, 116 S.Ct. arbitration, (“[A] preclude conferring meant statute- L.Ed.2d 6 legisla- The a different nature. a certain which is of jurisdiction for exclusive federal action” history’s to “civil tive reference necessarily require does not class of claims precludes nor includes explicitly in a claims federal neither of those resolution However, the refer- binding arbitration. court”). short, availability of a In

ill dispute ence to “informal proce- settlement between self-regulatory organizations seemingly precludes dure” binding arbitra- and their participants, members, per- scope, tion from its as binding arbitration sons dealing with members partici- not normally considered an informal pants. The House amendment con- procedure. Binding simply arbitration tained no comparable provision. The part reports. these passages These House receded It Senate. was therefore do not support assertion the clear understanding of the conferees Congress preclude intended to binding ar- that this amendment did not change ex- bitration. law, isting as articulated in Wilko v. Swan,

Additionally, Committee S.Ct. Conference (1953), Report states that L.Ed. 168 legislation requires concerning the effect “provision [by govern- warrantor] proceedings provisions mental or agreements participation consumer in inter- entered into by persons nal or private other dealing settlement with members and participants ” procedures.... Again, Id. this does of self-regulatory organizations. not indicate an intent to 236-37, Id. at 107 S.Ct. 2332 (quoting simply arbitration. It requires that the H.R.Rep. 94-229, No. at 111 re- (or consumer perhaps the government) printed 342). in 1975 U.S.C.C.A.N. participate in the procedures informal es- legislative This history implied a con- tablished the warrantor. The Com- gressional adopt intent the then-valid mittee cannot have had in mind binding holding in Wilko that arbitration is an comments, arbitration in its as gov- inadequate forum for the enforcement of ernment normally does not participate in Securities Act of 1933 statutory claims.13 private binding procedures. The Court found this reference was Again, congressional these reports do not not clear enough congres- evidence demonstrate that intended for sional intent to preclude pre-dispute arbi- binding arbitration to be included within agreements tration as to Securities Ex- scope of these informal dispute settle- change Act claims. Id. at ment procedures, nor that it intended to preclude binding arbitration under history here is not as MMWA. persuasive as that McMahon —which the Court found lan- found unpersuasive was by the Supreme guage the legislative history Se- consequently Court—and we con- must curities Exchange Act of language 1934— clude that the legislative history here does that appears more persuasive than that not evidence a congressional pre- intent above—did not evince a congressional in- clude arbitration of MMWA claims. tent to bar all pre-dispute agreements to arbitrate Exchange Securities Act claims. C 238, 482 U.S. at S.Ct. 2332. Specifically, legislative history stated: Finally, we the purposes examine

The MMWA, Senate bill amended section 28 of and whether there is an inherent the Securities Exchange Act 1934 conflict between the MMWA and the FAA. respect with to proceedings arbitration We know the MMWA was in enacted 13. The Inc., 477, 485, later Wilko Express, overruled 490 U.S. son/Am. upheld agreements and 1917, to arbitrate Securities S.Ct. 104 L.Ed.2d 526 Rodriguez Act claims. Quijas See de v. Shear- 93-151, at consumers, Rep. see No. S. infor er adequacy of “improve to

order unequal bar- consumers, perception a de 22-23 prevent available mation unilaterally enough to is not gaining power competition improve and ception, unenforceable. agreements 15 hold arbitration products.” consumer marketing of Gilmer, 1647. 2302(a). on See Report House The § U.S.C. course, individual can courts consider of Of purpose “[t]he the MMWA states unconscionability in ar- (1) of fraud or on claims make warranties legislation any in they as would agreements under bitration readily more products consumer thus can find id. contract. See We enforceable, other provide and stood the MMWA (FTC) no inherent conflict between Commission Federal Trade the FAA. and and consumers protecting means of better op for appropriations to authorize text, hold therefore We years for fiscal of the FTC erations purpose of history, and any inher not see We do and 1977.” congressional in evince a do not MMWA these arbitration conflict between ent of MMWA written arbitration tent to bar vindicate can still purposes. Consumers congression The warranty claims.14 clear arbitral warranties rights under their enforcing valid arbitra al intent favor adequate provide can Warranties forum. in this case.15 controls agreements tion consumers, information to truthful binding arbi signed a valid Waltons binding arbitration. requiring also while they must arbitrate agreement, tration con inherently unfair to Arbitration is their claims. MMWA Cos. Allied-Bruce Terminix sumers. See 265, 280, 115 Dobson, v. IV (1995) (“Congress, when 130 L.Ed.2d 753 have courts recognize some [FAA], of con We had the needs enacting the binding the MMWA mind”) precludes found that Although legis ... sumers arbitration, of courts and that a number expresses the MMWA history lative found no have agreed with us.16 We pow- have unequal bargaining with the concern warranties not sub- based on written the second need not consider 14. We therefore Congress ject because analysis. prong of the Chevron adjudicate to allow consumers intended court); II.B, v. Homes claims Yeomans again, Part such as we stated in 15. We note (M.D.Ala.) Legend, 2001 WL 237313 to submit requires consumers that the MMWA (finding that intended procedures for settlement to informal express claims, arbitration of war- if the breach written MMWA; relying warranty claims under the procedures, be- such rantor has established Homes, infra, reasoning in Waverlee 15 U.S.C. filing civil action. See fore pre- part arbitration is 2310(a)(3). way which states in holding in conflicts Our no grants access to a because MMWA cluded provision. with this forum); Oakwood Mobile judicial v. Pitchford Homes, Inc., Smith, F.Supp.2d 817 So.2d Compare Parkerson regu- (en banc) (W.D.Va.2000)(relying largely on FTC's (Miss.) *3 2002 WL finding binding to be im- (not permanent publication) lations yet released grant arbitration, of ac- permissible and on the (MMWA MMWA's as it was en- precludes judicial to find that cess to forum recently is more than the FAAand acted more Homes, infra, of dis- precludes binding arbitration MMWA specific; relying on Waverlee warranties); forum, Raesly v. putes over written judicial provision of a the MMWA's 562, Inc., F.Supp.2d MMWA); Housing, 573 105 Grand regulations under and the FTC pre- Inc., (S.D.Miss.2000) (finding that MMWA Tysons Imports, Browne v. Kline warranty (claims of written (E.D.Va.2002) arbitration cludes under F.Supp.2d 827 appellate opinions other federal point, MMWA respect to breach of oral outside of the Eleventh Circuit. Those express warranty claim under the Alabama cases that have found arbitration to be Code). Uniform Commercial Again, the relied, precluded have at least in part, on provision of judicial access to a forum is the fact that the provides MMWA consum not evidence of intent to prevent the use of judicial However, er access to a forum.17 Further, arbitration. it is improper to use III.A, as discussed in Part this is not regulations FTC themselves to deter- evidence of an intent prohibit arbitra mine congressional intent here. As noted tion of a statutory claim. previously, we must consider the statute’s text,

Some of those rely eases also on the history, and whether its regulations FTC congression determine purpose conflicts with statute, another intent, al and note that regulations determine congressional An agen- intent. state that consumers should have full ac cy’s regulations, promulgated pursuant cess to the courts and that informal dis statute, are not part of this test. It is pute should mechanisms be non-binding. only after considering these three factors For example, v. Wilson Waverlee and determining that Congress’s intent is Homes, Inc., F.Supp. 1537-39 ambiguous, that we proceed would then (M.D.Ala.1997), (11th aff'd, 127 F.3d 40 consider the regulations FTC’s and wheth- Cir.1997) (table op.), the court held that they er permissible are a interpretation of the MMWA precludes binding arbitration statute, per Chevron. not, would We of MMWA claims. The court relied on: case, in any use the regulations themselves (1) the MMWA’s of access to a congressional determine intent. (2) judicial forum; the fact that informal dispute settlement mechanisms are a pre Y (3) suit; requisite to regulations FTC which reflect the MMWA’s “command” We hold that does MMWA not that consumers should have access to the preclude binding arbitration of claims courts; history of the FTC pursuant to a valid binding arbitration regulations prohibit which binding arbitra agreement, which the courts must en- Id.; tion. see also Yeomans v. Homes of force pursuant to the FAA. The Waltons Legend, (M.D.Ala.) 2001 WL 237313 are to arbitrate bound their claims. We (expressly adopting the reasoning re REVERSE the judgment of the district Wilson).18 sult in But see v. Richardson court and REMAND entry of judg- Homes, Inc., Palm Harbor 254 F.3d 1321 ment opinion. accordance with this (11th Cir.2001) (predispute arbitration agreement not rendered unenforceable REVERSED and REMANDED. claims, relying Homes)’, (MMWA on Waverlee v. preclude Wilson does not of ex arbitration Homes, Inc., Waverlee F.Supp. press claims, implied warranty unless (M.D.Ala. 1997) (MMWAprecludes binding unconscionable), ar clause is as aff’d claims, bitration of part Oriented, Inc., because it v. Results 273 Ga. Crawford provides judicial access to a (2000); forum and be 548 S.E.2d 342 Energy Southern regulations Homes, cause the Ard, FTC interpreted have so Inc. 111 So.2d it), with In re (Ala.2000) American Homestar (holding Lancas a ter, Inc., (Tex.2001) 50 S.W.3d binding). to be (MMWA’stext, legislative history, pur pose arbitration); do 17. See note Oriented, Crawford,

Results Inc. v. 245 Ga. App. 538 S.E.2d 18. See also cases in note 16.

480 (1984). majority While the L.Ed.2d 694 dissenting: Judge,

KING, Chief the of the text concedes apparently essence, is, in us before case that the ambiguous isAct the The text of case. classic Chevron majority unilluminating, the history is signifi- conspicuous contains MMWA reject that we must concludes nonetheless read to Act can be the ambiguity: cant first under the interpretation the FTC’s of the use prohibit Congress because prong of Chevron warranties, it can in written agreements arbitra- stated unambiguously enforceability the not to address be read gov- warranties tion clauses in written clauses binding arbitration of are enforceable. the MMWA by erned pre- FAA’s warranties, case the in which indicia of clear find no such I Because likely be arbitrability would of sumption intent, I con- because congressional to agency The FTC —the applicable. interpretation Commission’s the clude that im- the task of Congress entrusted which and entitled is reasonable of the MMWA the elaborating plementing deference,1 I dis- respectfully judicial interpreted MMWA—has of sent. of the enforcement preclude war- clauses written binding arbitration Construction Regulatory FTC’s I. The areWe by the Act. governed ranties § 2310 interpretation the FTC’s bound to defer no lan- contains of the MMWA (1) The text has “direct- unless of the Act Con- indicating whether explicitly guage at issue” question precise ly spoken application gress the stat- intended construction FTC’s of written U.S.A., to breach the FAA Inc. Chevron ute is unreasonable. the MMWA.2 While Council, Inc., brought under claims 467 Res. v. Natural Defense “informal that the 2778, makes clear the statute 81 837, 104 S.Ct. U.S. it is broadly applicable as as be state stood to district courts and 1. A federal number thought widely similarly today. The Act was appellate courts have intermediate inapplicable to based assertions interpretation of claims deferred to the FTC's (as contrac- purely See, rights opposed statutory v. Mo e.g., Oakwood MMWA. Pitchford Swan, See, 958, claims). 346 Homes, Inc., e.g., Wilko v. F.Supp.2d 963 tual 124 bile Homes, 182, 427, 438, 168 98 L.Ed. (W.D.Va.2000); Waverlee 74 Wilson v. U.S. S.Ct. 1530, (M.D.Ala. Quijas Rodriguez v. Inc., de F.Supp. 1538-39 ovenuled 954 477, 2000, Inc., Inc., 484- 1997); Gateway 490 Express 331 U.S. v. Borowiec Shearson/Am. 218, (1989). 772 N.E.2d 104 L.Ed.2d Ill.Dec. Ill.App.3d 1980s, however, Dist.2002); Philyaw early v. Plati (Ill.App. 1 In the CL00-236, (and, arguably, expanded) the 2001 WL No. num Court clarified Enters. 9, 2001). ways. (Va. See a number of scope Cir. Ct. Jan. the FAA in at *2 Stone, addition, Justice: Mississippi Supreme re- Van Wezel Rustic Katherine the Federal binding pre-dispute Community arbitra- under and Coercion cently held Act, under L. Rev. 943-54 are not enforceable N.C. agreements tion Arbitration MMWA, history deter- of the Court’s part upon (detailing the court's based in interpretation of requires increasingly expansive deference to that Chevron mination Smith, applica- jurisdictional and substantive regulations. See Parkerson FAA’s the FTC (Miss.2002) (four jus- reading of the bility). this modem 817 So.2d Under concurring FAA, enforceability not concurring, justice "is presumption one tices agree- only). party bound when a result diminished founded on ment claim raises Express v. McMa- rights." Inc. language is explicit Shearson/Am. of such 2. The absence hon, At time of the surprising. particularly L.Ed.2d 185 not under- passage, the FAA was MMWA’s dispute procedures” governed settlement If he or she is dissatisfied with its §by 2310 of the MMWA cannot be bind- decision or warrantor’s actions, intended nature, 2310(a)(3)(c) ing § see 15 eventual performance, U.S.C. legal remedies, court, use of small (clarifying including require a warrantor can claims may pursued; be consumer to to an dispute resort informal procedure settlement The pursuing Mechanism’s decision is admissi- “before section”) (em- ble in any legal evidence as remedy provided under this in section 110(a)(3) of added), the Act. phasis the Act does not define the term “informal dispute settlement proce- § Indeed, Id. 703.5(g). regulations ex- clarify dure” or whether such proceedings “[djecisions plicitly announce that are intended to be the exclusive alternative Mechanism shall legally not be binding on litigation any under the Act. person.” § available Id. 703.5(j).4 The FTC interprets these regulatory The expressly authorizes the the inclusion of “prescribe FTC to setting rules forth agreements in written minimum requirements for any informal warranties. The FTC apparently adopts dispute procedure settlement which is in- position that the term “mechanism” is corporated into terms of a written appropriately broadly, read encompass 2310(a)(2) warranty.” § See 15 U.S.C. non-judicial all proce- resolution (2000). congressional Pursuant to this dures, See, including arbitration. e.g., 40 delegation of rulemaking authority, (Dec. Reg. 1975) Fed. FTC has established detailed regulations (characterizing binding arbitration as a governing the “mechanisms” that warran- type of “mechanism[\ whose decisions tors can require customers to pri- utilize would legally be binding”). Under this or to “exercising rights or seeking reme- reading, binding arbitration is precluded by dies created I Title of the Act.” 16 by plain language of regulations 703.2(b)(3) '(2001).3 § C.F.R. The regula- specifying that mechanisms cannot be le- tions define a “mechanism” as “an infor- gally binding any party. Indeed, mal dispute procedure settlement which public responding suggesting comments incorporated into the terms of a writ- that warrantors should be permitted to ten warranty to which any provision of include binding arbitration agreements in Title I Act applies.” Id. warranties, explicitly FTC in- 703.1(e). § The FTC regulations clearly dicated precluded rule such ar- contemplate that mechanisms pre- are a rangements. The Commission clarified cursor, alternative, not an to litigation, that: stating: The Rule does not allow this for two The Mechanism shall inform First, the con- reasons. as the Staff indi- Report sumer ... that: cates, Congressional intent was that de- Any 3. decisions, mechanism established in a presentation oral by parties, and warrantor, must be funded by the 16 C.F.R. monitoring obligations. of settlement Id. 703.3(a) (2001), § sufficiently but must in- § 703.5. sulated from the warrantor "so that deci- sions of performance the members and the However, good warrantor must "act in staff are not either influenced the war- whether, determining faith in and to what 703.3(b). sponsor,” § rantor or the id. extent, it will abide a Mechanism deci- regulations guidelines investiga- establish 703.2(g) sion.” 16 C.F.R. evidence, tion and rendering collection inquiry of the Chevron prongs both not dress 110 Mechanisms of Section

cisions in turn. Second, if even bind- binding. legally contemplated were ing Mechanisms Spoken to Directly Congress II. Has Act, the Commission of the 110 Section ? Question at Issue the Precise time, in point at this prepared, not is that neither acknowledgment in which system Despite a for guidelines develop themselves, history of the at the commit the text nor would consumers “in- whether clearly to resolve indicates purchase, MMWA product the time of pro- procedures” but non- binding, dispute in a settlement formal any difficulties to be are intended Commission is for 2310 The in proceeding. vided judicial, litigation available any guidelines that alternative exclusive now convinced not claims un- warranty sufficient of written out could ensure for breach which set finds Act, majority nonetheless consumers. der the protection spoken to the “directly has Congress that a war- clarify that did FTC Id. While the Initially, the at question issue.” precise to sub- agree could a rantor and consumer that, years fifty to the fact majority points binding arbitration their mit MMWA, of the Con- passage to the prior a deci- has rendered mechanism after the favoring general policy a gress expressed (thus post-dispute binding approving sion in a claims dif- of contractual Commission agreements), majority apparently The ferent statute. that inclusion position firmly to its adhered in policy expressed general that finds this clauses binding arbitration pre-dispute Congress’s intent FAA indicative impermissible be- warranty is in a written enacting the MMWA. war- the written within cause “reference remedy binding, non-judicial any ranty to a that indicated The Court has Act.” Id. by the Rule and prohibited considering whether Con reviewing court at 60211.5 question addressed gress specifically of Chevron “should prong under the first recognizes, correctly majority

As the examining particular not confine itself to the FTC’s required to defer we are (1) in isolation” but should statutory provision unless: of the MMWA construction “in the statute the words of pre- instead read directly spoken Congress has place a view to their and with issue, their context the FTC’s at or question cise Chevron, F.D.A. scheme.” in the overall unreasonable. construction is Corp., Tobacco v. Brown & Williamson 842M3, 104 2778. The 467 U.S. 120 S.Ct. of these in- only the first majority reaches Davis v. (quoting L.Ed.2d 121 unam- Congress has quiries, finding Treasury, Michigan Dept. binding arbitration biguously stated L.Ed.2d 109 S.Ct. warran- in written clauses are enforceable (1989)). example, in Brown Gard For I Because governed by the MMWA. ties ner, conclusion, I ad- agree cannot warrantor, service contrac- regulations decision interpretive under

5. The FTC's tor, or designated party is final leg- any third years after the (promulgated two concerning the war- any dispute clarify regulations) the Com- further islative Such state- ranty contract.... or service position arbi- mission’s use gives deceptive ... the Act since ments are These in written warranties. tration clauses jurisdiction over suits courts state and federal regulations explain that warrantor shall “[a] warranty service contract.” for breach any or ser- indicate added). (2001) (emphasis § 700.8 indirectly 16 C.F.R. directly vice contract either the Court considered a & Williamson L.Ed.2d Court concluded that Food, Department regulation Drug, of Veterans’ Affairs and Cosmetic Act did not permit interpreted “injury” Drug the term the Food and Administration only regulate products, benefits statute to include tobacco veterans’ because Con- intentionally injuries. gress inflicted had expressed its intent regarding directly had spo- appropriate regulation concluded prod- such issue, at in in question part ken to the based ucts the six tobacco-specific pieces of upon finding legislation the the word it subsequent Court’s enacted Food, in “injury” portions Drug, was used other of the and Cosmetic Act. See id. at 143-57,120 in same veterans’ benefits statute and S.Ct. 1291. analogous dealing statutes with service- case, In the instant the majority has not injuries ways clearly

related in a indicating gleaned clear congressional intent from to both intentional reference and uninten- the use of similar in words related stat- injuries. tional id. at See 115 S.Ct. utes, as did the in Gardner. Nor majority has the by found such clear intent examining

Similarly, Supreme Congress’s the refinement of a gen- Court has also eral in subsequent, a court statute a acknowledged considering specific more statute, as did the Congress specifically whether has ad- Bmum & Williamson Instead, majority Court. particular question dressed a under the bases its conclusion that prong may glean “directly spo- first of Chevron Con- precise question” ken to the gress’s regarding “clear intent” an earlier how to § interpret 2310 of the subsequent gen- statute from statutes address- MMWA on a policy expressed eral in ing subject prior, specif- a less same matter. As the Supreme ic statute. The recognized: Broim & Williamson Court Court has never reasoning invoked similar in applying the enacted, At the a it may time statute is prong inquiry. first of the Chevron How- a range plausible meanings. have ever, assuming, arguendo, even however, time, subsequent Over can acts method construction would be shape meanings. or focus those The circumstances, appropriate in some it is judicial task reconciling many classic clearly in problematic the context of the time, getting laws enacted over instant case. combination, in them “make sense” necessarily implica- assumes that consistently As the Court has may by tions of a statute be altered recognized, presumption of arbitrabili- implications of a later statute. is This ty the FAA established is not absolute particularly so where scope “may contrary be overridden earlier subsequent statute is broad but in congressional command” the statute cre- more specifically statutes address the ating right at issue. Shearson/Am. topic at hand. recognized As we recent- Express Inc. v. ly specific policy ... a in embodied a 226, (1987); S.Ct. L.Ed.2d 185 later federal statute should control our see also v. Inter Gilmer state/Johnson statute, construction of the even [earlier] Corp., Lane

though not been expressly ha[s] 1647, 114 L.Ed.2d 26 question The amended. in the instant case is whether the informal (internal quo- citations and settlement mechanism omitted, in original). tations alterations express 2310 of the MMWA such part reasoning, contrary Based in on this congressional the Brown command. The “[ejvidence in rules were discovery” and that Con- however, concludes majority, which arbitrations to modern such express applicable” intend gress did MMWA, indicia in the sense litigation” based “resemble command discovery, motion expressed intent “routine there can be congressional unpersuasive: logic legal of substantive circular application FAA. Such practice, arbitrability becomes awards presumption discursive rules, [and] there law”); established it is relevant conclusions fact and findings of after It is command. congressional contrary no Fed Shell, and Other ERISA G. Richard presumption apply inappropriate is Com When Statutes: Employment eral ques- the statute ascertaining whether ‘Adequate Substi Arbitration mercial a command. such contains tion Courts?, L. Rev. 68 Tex. tute” that Con- argues (1990) (“Historically, commercial majority further for have intended possibly basically not gress could shared have labor arbitration “informal regarding provisions § fact-find 2310’s the actual approach to informal govern procedures” settlement dispute In re process.... adjudication ing and “binding because proceedings arbitration decisions to recent sponse of as thought normally not is arbitration arbitra the use of commercial encouraging ma- the Unlike procedure.” an informal general however, part of tion, and as to conclude extremely hesitant I am jority, proce arbitration ensure that effort directly addressed has Congress substantive adequately protect dures on ambiguity based statutory apparent institutions arbitration commercial rights, a term about what assumption judicial procedures their to reform begun have addition, as- even “normally” means. formality to their considerable have added understanding of majority’s the suming Poly- Bernhardt proceedings.”); cf. “infor- meaning of accepted generally the Co., U.S. graphic indicia of persuasive was procedures” mal com (describing 100 L.Ed. MMWA, enacting the intent in Congress’s in 1956 proceedings mercial majority’s the all clear not at it is do not concluding “[a]rbitrators normally “is not conclusion judicial instruction of have benefit the accu- procedure” an informal of as thought their reasons law; give not they need the per- “arbitration” was how rately reflects pro results; of their the record their for enact- the time of MMWA’s ceived at in a complete not as as ceedings is commentators As numerous ment in 1974. an award trial; review judicial court formality of arbitra- recognized, have of a judicial review limited more than notably in increased has proceedings tion trial”). Moreover, today, arbitration even century, twentieth half the latter a more “informal” undoubtedly constitutes the Su- period since in the particularly Thus, to cate than litigation. procedure FAA “revitalized” the preme Court “infor “formal” as gorize arbitration applicability to clarifying ap begs question mal” largely See, Edward e.g., late 1980s. claims in Under comparison. basis propriate Arbitration Brunet, Folklore Replacing majority is circumstances, if the even these Arbitration, 74 Model with a Contract character would people most correct that (1990) (describing 39, Tul. L. Rev. procedure “formal” as a ize arbitration the “folklore arbitrations” from the shift time, hardly perception this point early part that were common the 1974 evidence that conclusive provides pro- wherein “informal century, twentieth arbi- to address did not intend Congress dominated,” “little or no was there cedures proceedings enacting Congress “directly spoken has pre- tration governing dispute “informal res- question cise at issue.” proceedings.” olution I Congress Because conclude that has § Neither the text of 2310 nor the statu- directly spoken question we face provision conclusively of this tory context today, I find it is necessary to reach the § applies indicates whether arbi- of the Chevron prong second inquiry— (i.e., § proceedings tration whether 2310- namely, whether the Commission’s inter- governed pro- “informal settlement pretation of 2310 is based on a permissi- cedures” are intended to be the exclusive ble construction of the statute. Act). litigation alternative under history contains some

While the III. Is the Interpretation FTC’s Congress indication that did intend the MMWA Unreasonable? procedures § 2310 to be the exclusive non- Because “delegated au- Act,6 judicial forum available under thority to the agency generally to make sufficiently these indicia are not illuminat- law,” United carrying rules the force of legislative history can be ing Corp., States v. Mead regarding congressional deemed conclusive L.Ed.2d 292 Moreover, are no intent. there subse- required we are to defer to the Commis- quent congressional enactments address- sion’s construction of the statute unless ing clarify written warranties that this is- circumstances, is unreasonable. Chev- interpretation that sue. Under these there is ron, 843, no basis for this court to conclude that 467 U.S. at 104 S.Ct. 2778.7 guidelines 6. See Part III. are "not entitled to the same defer- infra ence as norms that derive from the of exercise Secretary's delegated lawmaking pow- It that this merits notice standard of defer- ers”). rules, appears many While applicable to be the FTC’s unlike ence to the Com- rules, interpretive legislative regulations, subject mission's but not nec- were to notice and (i.e., essarily interpretive regulations. published FTC comment a notice of §§ regulations, 16 C.F.R. proposed Register rules in the Federal promulgated pursuant were to Con- parties permitted and interested were to sub- gress's express grant rulemaking authority of comments), interpretations mit written these MMWA, to the FTC in the 15 U.S.C. subject public partic- were not to the level of (1994). Supreme §§ 2309-10 As the ipation provisions mandated the MMWA's recently recognized, "express congressional governing promulgation regulations. engage process authorizations to (1994) (noting See U.S.C. 15 2309 that to rulemaking” very good are "a indicator of MMWA, properly prescribe a rule under delegation meriting Chevron treatment.” "give per- the Commission must interested Accordingly, Corp., Mead 121 S.Ct. at 2172. opportunity presentations sons an for oral to the extent that the statute is “silent or data, views, arguments, in addition to issue, ambiguous” respect with we to an Moreover, submissions”). light interpretation must defer the Commission's agency’s interpretive disclaimer that its legislative regulations interpreta- in its if that regulations are not intended to have the force is tion reasonable. See Whitman v. Am. law, 36111, Reg. (July 42 Fed. see 36112 481, Assocs., 457, Trucking 13, 1977) (noting interpretive regula- that the 903, 121 S.Ct. 149 L.Ed.2d 1 tions "are not ... substantive rules and do statutory provi- the force effect of not have contrast, interpretive the FTC's rules are industry guides, they sions” and that “like are necessarily subject not to Chevron deference. nature”), See, advisory appears that these e.g., Occupational Safety Martin v. & Comm'n, regulations are not entitled to Chevron defer- Health Review U.S. 1171, (1991) (not- County, ence. See v. Harris 111 S.Ct. 113 L.Ed.2d 117 Christensen ing interpretive that rules U.S. 120 S.Ct. 146 L.Ed.2d and enforcement -GO Lee, Homes, Inc. v. Energy the FTC’s Southem Energy argues

Southern (Ala.1999), because the which reasoned unreasonable So.2d interpretation that the Commission’s indicate “[although reasonable deference regulations that the concluding rationale for by an interpretation of a statute due an provisions prohibits administering that agency charged was its determination written warranties statute, when the is due no such deference since “deceptive are that such rejected the expressly Supreme Court courts and federal state gives ... the Act interpreta- agency on which the rationale of war- suits for breach over jurisdiction based”). tion is 16 C.F.R. contract.” and service ranty regulations interpretive the FTC’s While (2001). Pointing § 700.8 con- suggest the Commission’s do that a mere holding Court’s partially or state was based to federal struction of the statute jurisdiction grant of of a enforcement preclude jurisdictional not reading courts does on its of the statute’s under the mandatory accompanying materials provision, the Gilmer, see, at FAA, U.S. e.g., legislative regu- of its promulgation FTC’s 1647; (the focus of our Chev- appropriate lations Energy argues Southern inquiry)8 signal ron Commission regulations is to the FTC that deference reasons for permissible had a number of the Commission’s because inappropriate According it did. reading the statute as is not based the MMWA interpretation Register commentary accom- the Federal stat- construction permissible on a leg- of its panying promulgation the FTC’s courts have found supreme ute. Two state regulations, the Commission based islative determining persuasive reasoning intended its determination preclude do regulations that the FTC’s arbi- enforcement binding arbitration enforceability of in written warranties on tration clauses warranties. See agreements in written (1) reading two factors: Commission’s Lancaster, Inc., 50 re Am. Homestar of Interstate report of a staff of the House (Tex.2001) 480, (noting S.W.3d Foreign Commerce Committee’s Sub- normally appropriate while it would Finance; committee on Commerce to the FTC’s deference accord Chevron (2) the Commission’s concern administers, interpretation of the statute arbitration would inade- such regula- owed to no such deference is protect the interests of consumers. quately agree- binding tion arbitration precluding (Dec. 60167, 31, Reg. See 40 Fed. “the because Su- ments under the MMWA 1975). Initially, apparent- the Commission rejected arguments preme Court ... has ly portions legislative history read relies upon similar to which the FTC those (specifically, the subcommittee prohibits conclude the statute intent report) signal Congress’s staff Homes, arbitration”); Energy Southern (Ala.2000) resolution mechanisms estab- Ard, 1131, 1135 Inc. v. 772 So.2d Act pursuant dissent in would not be (explicitly See’s lished adopting Justice power persuade.” they (“Interpretations such as those in tent that "have (quoting opinion interpretations contained at 120 S.Ct. 1655 Skidmore letters—like Id. manuals, statements, Co., policy agency & 323 U.S. 65 S.Ct. v. Swift (internal guidelines, of which lack the quotations enforcement all 89 L.Ed. 124 style omitted)). force of warrant law—do not Chevron— deference.”). regulations interpretive Such supra note 7. respect,” only are to the ex- 8. See "entitled to but legally binding. While it is not possible to Court’s expressed hostility validity confirm the reading of this -of the towards in now-abandoned report,9 subcommittee staff such resources cases See, such as Wilko.10 e.g., McMa- are certainly permissible hon, basis for U.S. at 234 n. 107 S.Ct. 2332 agency’s conclusions regarding congres- (declining defer to the interpreta- SEC’s intent, sional as the reasonableness of an tion of the Securities Exchange Act of 1934 agency’s construction of a statute is often based on the SEC’s admission that “its in light assessed history. actions were based on any independent See, Chevron, e.g., 862-64, 104 analysis statute], of [the but instead were 2778; v. Sweet Babbitt Home Chap- premised on the Commission’s assumption, Or., ter Cmtys. a Great based on court of appeals decisions follow- Wilko, ing L.Ed.2d 597 ... agreements to arbi- trate not, Rule 10b-5 fact, claims were enforceable”) (internal citations and quota- The Commission’s second expressed mo- omitted, tions alterations original). Un- tive for precluding binding arbitration like the SEC in however, the agreements in written warranties is its FTC in the instant case published has concern that such recent regulatory review statement11 in the agreements inadequately protect consum- Register Federal confirming that origi- rule, ers. general As a this court nal reading of the MMWA to to defer to obliged the FTC’s expertise binding arbitration was based on indepen- regarding the appropriate most way to analysis dent of the statute. See 64 Fed. effect the MMWA’s consumer protection Reg. 1999) (“The (Apr. goals. As the Supreme Court noted Commission examined legality and the Chevron, “the principle of deference to merits of mandatory binding arbitration administrative interpretations has been clauses in written products consumer war- consistently followed this Court when- ranties it promulgated when Rule 703 in ever a decision as to the meaning or reach 1975. Although several industry represen- of a statute has reconciling involved con- tatives at that time had recommended that flicting policies, and full understanding of the Rule allow to require warrantors con- the force of the statutory policy in the sumers binding arbitration, to submit to given situation depended upon more rejected Commission that view as be- ordinary than knowledge respecting ing contrary to the congressional intent. subjected matters to agency regulations.” The based Commission this decision on its However, U.S. at 2778. S.Ct. analysis the plain language the War- such might deference inappropriate if Act.”) added). ranty (emphasis the FTC’s concerns about the impact of binding arbitration on consumers were at- regulatory This review statement the tributable to the Commission’s that, on reliance FTC confirms in light even report 9. appears This longer to be no obtain- mation about the costs and benefits of the able. review, guides rules and under as well as regulatory their impact.” and economic supra 10. See 2. note 22, 1999). Fed. Reg. 19700 (Apr. “Af- ter review of careful the comments received requested 11. The FTC comments on its rules response" in request, to its the guides Commission interpreting implementing and decided to retain the interpretations and part rules regulatory MMWA "as pro- review gram, change. without Id. under which it reviews rules and guides periodically in order to obtain infor- agency’s that the ly, majority contends endorsement of arbi- post-Wilko Court’s § be- of 2310 is unreasonable to read the construction tration, FTC continues binding it is inconsistent with preclude cause MMWA’s Gilmer, in warran- in opinion Court’s Gilmer. agreements (“[T]he deter- employee’s Commission considered whether an ties. See id. the written in Em- within Age that reference claim under the Discrimination mined non-judicial (ADEA), § rem- any binding, 621 et ployment Act 29 U.S.C. the Rule and the Act. compul- edy prohibited seq. should he submitted to inter- that this believes an arbitration sory pursuant The Commission ... Rule to be correct continues pretation employee’s securities agreement prohibit warrantors continue 703 will ar- registration application. employee The arbitration clauses including binding from intended to gued Congress with consumers in their contracts FAA to claims under the application of the to submit war- require consumers would ADEA, third suggesting that under the (in- arbitration.”) ranty disputes to test, there is an prong of the McMahon omitted). quotations ternal citations “inherent conflict” between arbitration at issue regulation unlike the Accordingly, Gilmer, underlying purpose. the ADEA’s statutory inter- agency’s at 1647. The case cannot be pretation the instant upon an ADEA employee part relied agen- on the “unreasonable” based deemed requiring “prompt- the EEOC to provision legal reliance abandoned cy’s presumed any alleged ly seek eliminate unlawful methods, Ener- Contrary to Southern principles.12 concilia- practice by informal assertion, of the FTC’s ex- neither gy’s tion, conference, re- persuasion” upon interpretation for its rationales pressed charge of a of discrimination. 29 ceipt indicates that the Commis- the MMWA 626(d) (1994). ap- § employee U.S.C. impermissible on an reading sion’s is based alia, parently argued, provi- inter that this of the statute. construction signaled Congress’s intent to have the sion any judicial involved in or non- EEOC to reach majority purports While claims, thus judicial resolution of Chevron, majority see prong the second of a arbi- precluding enforcement majority espouses opinion at note that would resolve dis- tration argument against Com- an additional without involvement because putes EEOC ap- 2310 that construction mission’s this alternative would “undermine the role directly relevant to the to be more pears Gilmer, of the EEOC.” prong the second Chevron inquiry under rejected argu- (i.e., S.Ct. 1647. The Court interpreta- whether Commission’s reasonable) ment, concluding “nothing than the MMWA tion of ADEA indicates that intended prong. Specifical- the first Chevron under See, justifica- terpretations. e.g., to Preserve that the FTC’s It merits notice Citizens Park, Volpe, prohibition Overton Inc. v. on tion for its 419-21, proceeding 28 L.Ed.2d 136 regulatory review is in the 1999 (holding post-hoc cannot rationalizations with the rationale that the FTC consistent justify agency based on original promul- decision that was at the time of its advanced rationale); regulations. see also gation Accord- an otherwise invalid of tire Cmty. Deposit giving ap- v. Federal ingly, precluded America's Bankers we are not from (D.C.Cir.2000) Corp., 200 F.3d propriate to the Commission's Ins. consideration (applying holding Park to the explanation by of Overton post-promulgation the Court’s interpretations statutory under the precedents disapproving "post- review of deference Chevron). prong justifications regulatory second agency hoc” in- that the EEOC be involved in employ- all provided dure” for in a written warranty. disputes” Indeed, ment and that “the mere involve- it is clear that Congress did not of an agency ment administrative in the attribute the same meaning to the two enforcement of a is not sufficient statute to phrases. MMWA, Unlike the the ADEA Id.. at arbitration.” 111 contains statutory no language instructing S.Ct. 1647. the regulatory agency to promulgate pro- cedures and regulations governing “con- majority hold, reads Gilmer to as a ciliation, conference, persuasion” and un- proposition, broad express Moreover, der the ADEA. the EEOC in a statute for out-of-court dispute resolu regulations contain no detailed alternative tion does not preclude application dispute resolution procedures akin to also, e.g., Cunningham FAA. See v. Fleet those in contained the FTC’s MMWA Georgia, wood Homes 253 F.3d regulations, suggesting that the EEOC (11th Cir.2001); Am. Homest did not “conciliation, read the conference, tar, 487; Ard, at S.W.3d 772 So.2d at persuasion” language in the ADEA to (explicitly Justice adopting See’s dis congressional constitute delegation of Lee, 1012). However, sent in 732 So.2d at authority regulate alternative dispute I find Gilmer Court’s discussion of the resolution mechanisms under the Act. participation EEOC’s in “informal methods circumstances, Under these the FTC’s conciliation, conference, persuasion” construction of the MMWA cannot be to be too far afield from the facts deemed “unreasonable” based. on a per- dispositive. instant ease to be ceived inconsistency with the Court’s rea- Initially, it merits notice that posi- soning Gilmer. Gilmer is simply inap- tion advanced by the Waltons the in- posite. case materially stant different from the As arguments none of the advanced position advanced by the employee in Gil- Southern Energy the majority convinc- mer. The Waltons ask this court to defer ingly demonstrates that the FTC’s con- to an agency’s administrative regulatory struction of unreasonable, 2310 is interpretation that Congress intended for court required defer the FTC’s a statute to preclude binding arbitration, interpretation of Moreover, the statute. prohibition to read a of binding arbi- there are a number of compelling indepen- tration into a statute and its regulations dent why regulations reasons the FTC based about impermissibly concerns issue in the instant case are entitled to diminishing the role of agency. particular deference from this court. Moreover, the language statutory provision at issue in materially Gilmer is Initially, merits that the notice FTC’s different from language legislative regulations constitute a contem- MMWA at issue in this ease. The poraneous regulatory interpretation of the ADEA’s admonishment the EEOC MMWA. An interpretation administrative should attempt engage “conciliation, peculiar “has weight it involves a when conference, persuasion” with the em- contemporaneous construction of a statute ployer upon receipt of an employment the [persons] charged respon- with the discrimination cannot charge sibility read setting machinery motion, speak to the availability of binding arbi- making parts efficiently work tration in the way same as a smoothly they while are yet untried and that, terms, its addresses new.” Zenith Corp. Radio v. United “any States, informal dispute 443, settlement 450, proce- 2441, 437 S.Ct. 57 98

490 carry special (alteration interpretations (1978) agency sistent original) in 337

L.Ed.2d Aerospace Co. Nitrogen Prods. Co. NLRB v. Bell Norwegian weight. See (quoting 315, States, 53 288 U.S. Div. Textron v. United (1933)); (1974) (“[A] Ste 77 L.Ed. 1757, 40 L.Ed.2d 134 S.Ct. S.Ct. of. Ques Review Judicial Breyer, phen long- to the great weight accord may court of L. Policy, Admin. Law and tions on a statute standing interpretation placed of one ratio (noting that 363, 368 Rev. charged with its administra- agency an agency’s contem to an for deference nale tion.”);. Smiley, 517 U.S. see also is the of a statute interpretation poraneous that, antiquity (noting while 116 S.Ct. the agency that enforces “[t]he that notion validity under the not a condition of is drafting in had a hand have may statute Chevron, inter- “agency of prong second agency “may pos that the provisions” come long that are of pretations standing in the form of history internal sess of rea- with a certain credential us before tradition’ oral or 'handed-down documents sonableness, rare that error since it is meaning of a diffi the light on casts of persist”). Such “credential long would Smiley But provision”). phrase cult cf. particularly to be appears reasonableness” (South Dakota), N.A., 517 U.S. v. Citibank case, in the the instant where warranted 1730, 135 740-41, 116 L.Ed.2d 25 recently reconsidered and reaf- agency has “contemporaneity” (reasoning consistent inter- longstanding, firmed its validity under the of not a condition is a notice- through of the statute pretation Chevron, def of as Chevron prong second proceed- review regulatory and-comment congres in of notions grounded is erence ing. interpretive authority of delegation sional history “a presumption Finally, rather than while the agencies provisions any specific drafted agency] does not contain [the present hearings, at the availability or were question, of the arbitra- discussion sponsors”). principal spoke tion,13 there some indirect indication is in- legislative history Congress par- accord this court should Similarly, dispute settlement tended internal regulatory to the deference FTC’s ticular §by 2310 to be the governed mechanisms because the of the MMWA interpretation litigation available exclusive alternative con- longstanding, represent regulations Act, validity confirming thus under statute. interpretation sistent by the reading espoused of the FTC interpretations that are re- agency While Language report the Waltons. certainly are vised over time entitled Sullivan, the Senate Committee deference, Commerce see Rust Chevron enlightening.14 The 173, 186, particularly general (1991), description legislation con- contained longstanding and L.Ed.2d enacted, Rep. history legislation see S. statutory of the FAA that was Conf. light of such supra reprinted at note the absence outlined No. 93-1408 unsurprising is unclear discussion Sen- the House and U.S.C.C.A.N. —it extent would and to what whether legislation only ate contained versions might contemplated the FAA have respect minor differences remedi- at the applicable remedies time generally id. al of the MMWA. See MMWA’senactment. these minor differences undermine None of illustrating report in of the Senate value House version of the MMWA 14. While the Congress’s regarding the intentions MMWA. legislation the conference was the basis for deliberations and the committee's eventual report that describes the bill’s attorney’s remedial able fees if available successful provisions as follows: in the litigation.” Id. at pas- 22-23. This sage suggests (not that litigation arbitra-

If supplier a to honor fails his tion) is the “formal adversary proceeding” or service contract promises, con- contemplated by the Act for a consumer sumer can avail spec- himself of certain who is dissatisfied with the warrantor’s If supplier remedies. that has ified attempt to cure or any with informal dis- provided a fide informal dispute bona pute procedure settlement that the war- settlement mechanism dis- which rantor has established. putes between suppliers and consumers resolved, are to be then the consumer Language in the Conference Committee would utilize the informal dispute set- report provides further confirmation that tlement mechanism before pursuing Congress intended 2310-compliant pro- other avenues of redress. a supplier If cedures to be the exclusive method of non- does not have dispute set- judicial informal dispute resolution available under tlement mechanism con- resolving for the Act. The Conference Committee report complaints, sumer or if the consumer is states: not satisfied results obtained It should be recognized ... provi- any dispute informal pro- settlement sion governmental for par- consumer ceeding, the consumer pursue can his ticipation in private internal or other legal remedies ain court competent dispute procedures settlement under the

jurisdiction, provided that he af- bill is required by legislation. this Con- forded the supplier oppor- reasonable sequently providing warranties tunity to cure the breach. consumers must first resort informal (1973) (em- Rep. S. No. at 2-3 procedures settlement before added). phasis passage This suggests initiating a suit contrary are to the in- for the intended legislation tent of the where there is no authorize only specific remedial governmental specific mechanisms mentioned the Act. This participation consumer in the procedure language implies litigation, also or where the procedure is otherwise un- arbitration, is the “other of re- avenue[] fair. dress” available consumer if the Rep. S. Conf. No. reprint- has not

warrantor established an informal (em- ed in 1974 U.S.C.C.A.N. dispute settlement mechanism or if added). phasis This passage enlighten- consumer is unsatisfied with the results First, ing for reasons. equates two proceeding. of that term “informal dispute proce- settlement

The same suggested conclusion is dure” as used the Act with a more report’s subsequent, more analy- general (i.e., detailed definition “internal or other sis of the provisions. MMWA’s remedial private dispute procedure”), settlement portion This report states: “[Section thus suggesting Congress intended spells out 2310] the remedies to for the available term “informal dispute settlement purchaser products. consumer A procedure” to be read broadly. addi- purchaser can tion, utilize informal dispute set- specifically indicating that any tlement procedures by suppli- established procedure that comply does not with the or, ers having supplier afforded requirement reason- for consumer or cure, opportunity may able governmental resort participation “contrary adversary formal proceedings with reason- the intent of the legislation,” passage gov- was intended to § 2310 suggests COMPANY, The PAINTING dispute resolu- alternative all

ern forms Petitioner/Cross- warranty. in a written for provided tion Respondent, from the Conference passages These report and the Senate report Committee interpretation the Commission’s LABOR RELATIONS reinforce NATIONAL (and, BOARD, Respondent/Cross- for intended Petitioner. regulations) thus, implementing the FTC’s non-judicial forms of govern all Nos. 00-1480. in the terms of written included resolution Appeals, United States Court Thus, while warranties. Sixth Circuit. may not be suffi- the MMWA history of in- Congress’s to establish itself cient Argued: Oct. FAA to application of the tent to 6, 2002.* Decided and Filed: Feb. un- of written for breach claims MMWA, provide these materials der the the “reasonableness” of support

added interpretation. the Commission’s I find that Con- Accordingly, because “directly spoken pre- gress has not binding arbitration whether question” cise governed by warranties in written clauses enforceable, and because are the MMWA of the statute is construction the FTC’s reasonable, I would defer to the eminently affirm the expertise and dis- Commission’s judgment refusing compel trict court’s written warran- of the Waltons’ I ty claims. dissent. * originally opinion issued as an un- ed the as one recommended for full- This decision was published February decision” filed on publication. text designat- 2002. On June the court

Case Details

Case Name: Thomas E. Walton Le'ellen Walton v. Rose Mobile Homes Llc, Southern Energy Homes, Inc.

Court Name: Court of Appeals for the Fifth Circuit

Date Published: Jul 30, 2002

Citation: 298 F.3d 470

Docket Number: 00-60742

Court Abbreviation: 5th Cir.