PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 13-1064

CHRISTINE SENEY, Individually and as Parent and Next Friend 

of I.S. and N.S.; ANTWAN R. SENEY,

Plaintiffs - Appellants,

v.

RENT-A-CENTER, INC.; RENT-A-CENTER EAST, INC.,

Defendants - Appellees.

Appeal from the United States District Court for the District of 

Maryland, at Baltimore. James K. Bredar, District Judge. 

(1:12-cv-02347-JKB)

Argued: October 31, 2013 Decided: December 11, 2013

Before MOTZ and AGEE, Circuit Judges, and Joseph F. ANDERSON, 

Jr., United States District Judge for the District of South 

Carolina, sitting by designation.

Affirmed by published opinion. Judge Motz wrote the opinion, in 

which Judge Agee and Judge Anderson joined.

ARGUED: Daniel Warren Whitney, Sr., WHITNEY & BOGRIS LLP, 

Towson, Maryland, for Appellants. James Charles Mehigan, WILSON 

ELSER MOSKOWITZ EDELMAN & DICKER LLP, Washington, D.C., for 

Appellees. ON BRIEF: Gerald S. Gaetano, WHITNEY & BOGRIS LLP, 

Towson, Maryland, for Appellants. Peter A. Coleman, WILSON 

ELSER MOSKOWITZ EDELMAN & DICKER LLP, Baltimore, Maryland, for 

Appellees.
2

DIANA GRIBBON MOTZ, Circuit Judge:

Christine and Antwan Seney appeal the district court’s

order compelling arbitration of their breach of warranty claim 

under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq.

(2006). For the reasons that follow, we affirm.

I.

In March 2012, the Seneys entered into a “Rental-Purchase 

Agreement” with Rent-A-Center, Inc. (“RAC”) for a wooden trundle 

bed and mattress. In that contract, the Seneys agreed to rent 

the bed for two weeks, with an option to renew the lease. If 

the couple leased the bed for an additional six months, RAC 

would transfer title to them. The contract also contained a 

purchase option. By exercising the option, the Seneys could buy 

the bed before six months had passed.

Pursuant to this contract, RAC retained the manufacturer’s 

warranty to the bed. RAC did provide, in the rental contract,

its own warranty to repair, replace, and service the bed during 

the term of the lease. In that contract, the parties also 

agreed to submit any contract dispute to binding arbitration.

In April 2012, RAC delivered the bed to the Seneys’ home 

and assembled it in their son’s bedroom. Within a week, the boy

complained of itchiness and pain. A doctor diagnosed his

condition as bedbug bites, and Mrs. Seney called RAC to 
3

complain. The company returned to the home and replaced the 

bed’s mattress. Workers, however, left behind the bedframe, 

which apparently was also infested with bedbugs. The 

infestation continued, and Mrs. Seney complained again. This 

time, RAC removed both the mattress and the frame, but not 

before dragging them through the Seneys’ home. The bed shed 

bugs, and the infestation spread. RAC paid for a partial 

fumigation, but the company refused to treat the entire house.

The Seneys filed suit in Maryland state court, alleging a 

breach of warranty by RAC in violation of the Magnuson-Moss 

Warranty Act (“MMWA” or “the Act”). RAC removed the case to 

federal court and filed a motion to compel arbitration. In 

response, the Seneys claimed that their dispute could not be 

submitted to arbitration, at least insofar as that arbitration 

was binding. Relying on regulations promulgated by the Federal 

Trade Commission (“FTC”) pursuant to its authority to interpret 

the MMWA, the Seneys maintained that RAC could not require 

binding arbitration as part of a consumer warranty. See 16 

C.F.R. § 703.5(j) (2013).

The district court rejected the argument that the FTC 

regulations ban binding arbitration, and so granted RAC’s motion 

to compel arbitration. The Seneys noted a timely appeal. We 

review a district court order compelling arbitration de novo. 
4

See Peabody Holding Co. v. United Mine Workers of Am., Int’l 

Union, 665 F.3d 96, 101 (4th Cir. 2012).

II.

The Seneys contend that the district court erred in holding 

that the FTC regulations interpreting the MMWA contain no ban on 

binding arbitration. They maintain that the court conducted “an 

incomplete legal analysis.” Reply Br. 1. Specifically, they 

maintain that the court failed to recognize that, while the FTC 

regulations do permit binding arbitration after the parties have 

engaged in informal dispute resolution, the regulations prohibit

binding arbitration before the parties have so engaged. Careful 

examination of the MMWA, and the FTC regulations promulgated 

pursuant to it, persuade us that the Seneys are correct.

Congress enacted the MMWA in response to a swell of 

consumer complaints regarding the inadequacy of warranties to 

protect consumers’ interests. See H.R. Rep. No. 93-1107, 

reprinted in 1974 U.S.C.C.A.N. 7702, 7708–11. By passing the 

Act, Congress sought to “improve the adequacy of information 

available to consumers, prevent deception, and improve 

competition in the marketing” of goods. 15 U.S.C. § 2302(a). 

To further these goals, Congress provided a private right of 

action to consumers “damaged by the failure of a supplier, 

warrantor, or service contractor to comply with . . . a written 
5

warranty, implied warranty, or service contract.” Id.

§ 2310(d)(1).

Under the MMWA, consumers may sue in court or submit to 

“informal dispute settlement procedures” in advance of 

litigation. Id. § 2310(a)(3). The statute does not define or 

describe “informal dispute settlement procedures.” Instead, 

Congress provided that the FTC would specify “minimum 

requirements” for informal dispute resolution. Id.

§ 2310(a)(2). To that end, the FTC has promulgated a host of 

regulations describing a variety of “mechanisms” to which 

consumers may be required to resort before pursuing their claims 

in court. 16 C.F.R. § 703.1 et seq.

Pursuant to those regulations, a “mechanism” is an 

“informal dispute settlement procedure which is incorporated 

into the terms of a written warranty.” Id. § 703.1(e). The FTC 

has interpreted the term broadly: “mechanisms” encompass all 

nonjudicial dispute resolution procedures, including

arbitration. See 40 Fed. Reg. 60,168, 60,210–11 (Dec. 31, 

1975). Of importance here, the FTC regulations provide that 

decisions of these informal dispute resolution mechanisms must 

be nonbinding. 16 C.F.R. § 703.5(j). In other words, the 

regulations limit warrantors’ ability to insist in their written 

warranties that consumers submit to binding arbitration as part 

of a mechanism (an informal dispute settlement procedure). 40 
6

Fed. Reg. at 60,211 (“[R]eference within the written warranty to 

any binding, non-judicial remedy is prohibited by . . . Rule 

[703] and the Act.”).

The FTC regulations, however, distinguish between so-called 

“pre-dispute” and “post-dispute” binding arbitration. See Davis 

v. So. Energy Homes, Inc., 305 F.3d 1268, 1280 n.8 (11th Cir. 

2002); Walton v. Rose Mobile Homes, LLC, 298 F.3d 470, 481-82 

(5th Cir. 2002) (King, C.J., dissenting).1 “Pre-dispute” binding 

arbitration refers to parties’ employment of binding arbitration 

as the exclusive means of resolving disputes, i.e., without 

first obtaining a nonbinding “mechanism” decision. See Walton, 

298 F.3d at 481–82 (King, C.J., dissenting); see also 40 Fed. 

Reg. at 60,210. In general, the FTC regulations prohibit “predispute” binding arbitration. 16 C.F.R. § 703.5(j); 40 Fed. 

Reg. at 60,210. By contrast, the regulations permit “postdispute” binding arbitration. 40 Fed. Reg. at 60,211. “Postdispute” arbitration takes place after parties have first 

 1 We recognize that the terms “pre-dispute” and “postdispute,” which the parties and other courts have consistently 

used, are somewhat misleading. Obviously, if the parties seek 

to resolve a disagreement -- through a “mechanism” or otherwise 

–- they have a dispute. But however described, the principle is 

this: the FTC regulations ban a supplier from requiring binding 

arbitration in a written warranty as the exclusive means of 

dispute resolution. See 40 Fed. Reg. at 60,210. If the parties 

first engage in some form of nonbinding dispute resolution, 

however, the regulations permit the parties to then engage in 

binding arbitration.
7

mediated their dispute informally through a nonbinding

“mechanism.” See Walton, 298 F.3d at 482 (King, C.J., 

dissenting); 40 Fed. Reg. at 60,211. Thus, under the FTC 

regulations, if the parties first engage in nonbinding dispute 

resolution, a warrantor may then require a consumer dissatisfied 

with the “mechanism” decision to submit to binding arbitration. 

40 Fed. Reg. at 60,211 (“[N]othing in the Rule . . . precludes 

the use of any other remedies [e.g., binding arbitration] by the 

parties following a Mechanism decision.”) (emphasis added).2

Accordingly, the district court erred in holding that the 

FTC regulations contain no ban on binding arbitration. The FTC 

ban is intricate and limited, but it certainly exists.

 2 Even within the category of “pre-dispute” binding 

arbitration, the FTC’s ban is not absolute. Although a

warrantor may not include a “pre-dispute” binding arbitration 

clause within the terms of a written warranty, 16 C.F.R. 

§ 703.5(j), the parties may agree to “pre-dispute” binding 

arbitration in some other document. See 40 Fed. Reg. at 60,211 

(“[Although] reference within the written warranty to any 

binding non-judicial remedy is prohibited . . . , nothing in the 

Rule precludes the parties from agreeing to use [binding 

arbitration].”) (emphasis added). Thus, if after signing a 

warranty the parties agree to employ binding arbitration as 

their only means of redress, the FTC regulations do not ban that

preference. Id. This additional exception to the general rule

is not implicated in this case.
8

III.

That the ban exists, however, does not resolve this appeal. 

The Seneys must also establish that the ban on arbitration 

applies to their rental agreement with RAC.

Before addressing that most fundamental question, we note 

that, rather than focusing on it, the parties argue at length 

about the permissibility of the FTC ban. In doing so, they

expose an important tension between two major doctrines of 

statutory interpretation. In Shearson/American Express, Inc. v. 

McMahon, the Supreme Court instructed courts to evaluate the 

arbitrability of statutory rights in light of the liberal 

“federal policy favoring arbitration.” 482 U.S. 220, 226 

(1987). McMahon established that if a statute is silent with 

respect to arbitration, courts should presume its 

permissibility. Id. at 226–27. McMahon, however, did not 

address whether agencies should also presume the permissibility 

of arbitration. The FTC, the agency that promulgated 

regulations interpreting the MMWA, did not employ a proarbitration presumption. See 40 Fed. Reg. at 60,210. Rather, 

as explained above, it concluded that pre-dispute binding 

arbitration was impermissible under the Act. 16 C.F.R. 

§ 703.5(j). Pursuant to the Supreme Court’s directive in 

Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 
9

Inc., that interpretation, if reasonable, should control. 467 

U.S. 837, 842–43 (1984).

The way in which Chevron squares with McMahon, however, is 

uncertain, and courts have divided on the question. Compare

Davis, 305 F.3d at 1277–81 (concluding that courts should assess 

the FTC’s arbitration ban under Chevron, but that the ban is 

unreasonable in light of McMahon) with Walton, 298 F.3d at 475–

78 (holding that the McMahon presumption renders the otherwiseambiguous MMWA clear, obviating the need for Chevron deference) 

and Kolev v. Euromotors W./The Auto Gallery, 658 F.3d 1024, 

1025–30 (9th Cir. 2011), opinion withdrawn, 676 F.3d 867, 867 

(9th Cir. 2012) (explaining that courts engage in Chevron

analysis, pursuant to which the FTC’s regulation is permissible; 

the FTC need not apply the McMahon presumption because agencies 

need not subscribe to judicial canons).

We need not enter the fray. This is so because the FTC ban 

on binding arbitration does not apply to the Seneys’ contract

with RAC.3 The FTC regulations limit suppliers’ ability to 

 3 The parties initially failed to brief the applicability of 

the FTC arbitration ban to the Seneys’ contract with RAC; we 

requested and received supplemental statements of authority on 

the issue. In their submission, the Seneys contend that we 

cannot (or should not) address the question because no party 

raised it. The contention is unpersuasive. See Kamen v. Kemper 

Fin. Servs., Inc., 500 U.S. 90, 99 (1991) (“When an issue . . . 

is properly before the court, the court is not limited to the 

particular legal theories advanced by the parties, but rather 

(Continued)
10

require binding arbitration of “written warranties” in sales

agreements: they do not reach warranties included in leases. 

Because the Seneys rely on a warranty in a lease (not a sales) 

agreement, their contract falls outside the FTC regulation 

banning binding arbitration.

A.

The FTC regulations clearly state that if a supplier 

provides for dispute resolution by way of a “mechanism,” the 

“[d]ecisions of the [m]echanism shall not be legally binding.” 

16 C.F.R. § 703.5(j). At the same time, the FTC ban is far from 

sweeping. The regulations define a “mechanism” as “an informal 

dispute settlement procedure which is incorporated into the 

terms of a written warranty.” Id. § 703.1(e). In other words, 

the FTC ban applies only to dispute settlement procedures 

included in a “written warranty.”

The FTC regulations specifically define the term “written 

warranty” as:

 

retains the independent power to identify and apply the proper 

construction of governing law.”); accord United States ex rel. 

May v. Purdue Pharma, L.P., -- F.3d -- (4th Cir. 2013) [No. 12-

2278, argued Sept. 20, 2013]. Indeed, the Supreme Court has 

expressly held that a court may consider an issue like this one, 

which is “antecedent to and ultimately dispositive of the 

dispute before it, even an issue the parties fail to identify 

and brief.” U.S. Nat’l Bank of Or. v. Indep. Ins. Agents of 

Am., Inc., 508 U.S. 439, 447 (1993) (internal quotation marks 

and alteration omitted).
11

(1) Any written affirmation of fact or written 

promise made in connection with the sale of a consumer 

product by a supplier to a buyer which relates to the 

nature of the material or workmanship and affirms or 

promises that such material or workmanship is defect 

free or will meet a specified level of performance 

over a specified period of time, or

(2) Any undertaking in writing in connection with the 

sale by a supplier of a consumer product to refund, 

repair, replace, or take other remedial action with 

respect to such product in the event that such product 

fails to meet the specifications set forth in the 

undertaking, which written affirmation, promise or 

undertaking becomes part of the basis of the bargain 

between a supplier and a buyer for purposes other than 

resale of such product.

Id. § 703.1(c) (emphasis added). Thus, as the definition makes 

plain, for purposes of the FTC regulations, a “written warranty” 

must implicate a “sale.” A promise -- even a written promise --

does not constitute a “written warranty” under the regulations 

if it is not made “in connection with a sale” or is not “part of 

the basis of the bargain between a supplier and a buyer.” See

id.

Here, the promise that RAC made to the Seneys was not “in 

connection with a sale.” The Uniform Commercial Code specifies 

that a “sale” consists of “the passing of title from the seller 

to the buyer for a price.” U.C.C. § 2-106(1) (1977). In its 

contract with the Seneys, RAC did not pass title to them. 

Rather, RAC expressly retained title to the bed unless and until 

the Seneys purchased the bed or renewed their lease for six 
12

months. The Seneys did not exercise either of these options, 

and thus title remained with RAC.

For the same reasons, the Seneys do not constitute “buyers” 

of the bed. As the Seventh Circuit has noted, a plaintiff 

cannot purport to be a “buyer” before title has passed to him. 

See Voelker v. Porsche Cars N.A., Inc., 353 F.3d 516, 523 (7th 

Cir. 2003). That a plaintiff holds a purchase option does not 

alter the analysis. Until a plaintiff exercises his option, he 

remains an option-holder, not a buyer. See id. Here, again, 

the Seneys never exercised their option. At the time of suit, 

RAC -- not the Seneys -- held title to the bed, and nothing in 

the record suggests that the Seneys subsequently took title.

A different result might obtain if the lease of the bed 

were the “economic equivalent” of a sale. See Henderson v. 

Benson-Hartman Motors, Inc., 33 Pa. D. & C.3d 6, 24-26 (Pa. Ct. 

Com. Pl. 1983). This is so because a court might then conclude 

that there is no economic difference between a lease and a sale 

when, for instance, a lessee pays an amount in rent equal to the 

full purchase price of the item, including interest. See J.L. 

Teel Co. v. Houston United Sales, Inc., 491 So.2d 851, 858–59 

(Miss. 1986); Sawyer v. Pioneer Leasing Corp., 428 S.W.2d 46, 

53-54 (Ark. 1968); U.C.C. § 1-203. In that circumstance, the 

transaction is effectively the same as a sale in which a buyer 

purchases an item but pays for it over time. Of course, with a 
13

lease, title remains with the lessor, while with a sale, the 

buyer acquires ownership. But this difference has not prevented

some courts from applying the law of sales to this very specific 

class of leases, even in the MMWA context. See Henderson, 33 

Pa. D. & C.3d at 25–26.

Here, however, the Seneys’ lease was not the economic 

equivalent of a sale. Rather, their contract with RAC provided 

that the Seneys were not required to pay an amount equal to the 

purchase price of the bed. To be sure, the Seneys could have 

exercised their renewal or purchase options, at which point they 

might have become so bound. But they had no obligation to 

exercise their options -- nor did they elect to do so. Their

contract with RAC required only that the Seneys rent the bed for 

two weeks, for an amount far below the purchase price. Because 

this transaction bears no indicia of a sale, we cannot treat it 

as such. Thus, the FTC arbitration ban simply does not apply to 

the Seneys’ rental agreement with RAC.

B.

In the hope of convincing us otherwise, the Seneys direct 

us to a host of cases, most of which hold that lessees are 

appropriate plaintiffs under the MMWA.4 This may be so. But the 

 4 See Voelker, 353 F.3d at 525; Cohen v. AM Gen. Corp., 264 

F. Supp. 2d 616, 621 (N.D. Ill. 2003); Am. Honda Motor Co. v. 

Cerasani, 955 So.2d 543, 549 (Fla. 2007); O’Connor v. BMW N. 

(Continued)
14

fact that the Seneys may (or may not) have a cause of action 

under the statute does not answer the question here: must the 

Seneys initially submit that cause of action to binding 

arbitration?

All of the cases cited by the Seneys involve facts very 

different from those in the case at hand. In every case on

which the Seneys rely, a lessor bought a product from a 

manufacturer and obtained a manufacturer’s warranty. The lessor 

then assigned the warranty to a lessee, who subsequently sued

the manufacturer when the product proved defective. These 

courts have concluded that the lessee, who had been assigned the 

manufacturer’s warranty, was entitled to bring a cause of action

against the manufacturer. They reasoned that the lessee held a 

“written warranty” by virtue of the manufacturer’s warranty, 

made in connection with a sale. They found it unimportant that 

the lessee did not participate in the sale. Rather, according 

to these courts, for MMWA purposes, as long as the manufacturer 

 

Am., LLC, 905 So.2d 235, 240 (Fla. Dist. Ct. App. 2005); Mesa v. 

BMW N. Am., LLC, 904 So.2d 450, 453 (Fla. Dist. Ct. App. 2005); 

Mangold v. Nisson N. Am., Inc., 809 N.E.2d 251, 253-55 (Ill. 

App. Ct. 2004); Dekelaita v. Nissan Motor Corp., 799 N.E.2d 367, 

373-374 (Ill. App. Ct. 2003); Ryan v. Am. Honda Motor Co., 896 

A.2d 454, 456 (N.J. 2006); Szubski v. Mercedes-Benz, U.S.A., 

L.L.C., 796 N.E.2d 81, 88 (Ohio Ct. Com. Pl. 2003); Peterson v. 

Volkswagen Am., Inc., 679 N.W.2d 840, 846 (Wis. Ct. App. 2004); 

but see Parrot v. DaimlerChrysler Corp., 130 P.3d 530, 536 

(Ariz. 2006) (lessees may not sue under the MMWA); DiCintio v. 

DaimlerChrysler Corp., 768 N.E.2d 1121, 1127 (N.Y. 2002) (same).
15

made a written promise “in connection with a sale” to someone, 

and that someone assigned the promise to the lessee, the lessee 

could sue the manufacturer.

We pass no judgment on the holdings of these cases. Right 

or wrong, they are not helpful here. The Seneys do not sue on 

the manufacturer’s warranty. Indeed, they cannot -- RAC never 

assigned it to them. The Seneys can and do sue only on RAC’s 

warranty. But that warranty –- to service the bed –- is utterly 

divorced from a sale. In the cases relied on by the Seneys, the 

manufacturer’s warranty accompanied a sale: the one between the 

manufacturer and the lessor. Here, RAC’s warranty accompanied 

no sale; the Seneys never bought the bed.

Because the Seneys have not linked RAC’s warranty to any 

sale, they have failed to establish the existence of a “written 

warranty” under FTC regulations. Accordingly, their attempt to 

rely on these regulations, which presuppose a “written 

warranty,” is unavailing. For this reason, the binding 

arbitration clause is enforceable, and so the judgment of the 

district court is

AFFIRMED.