Case Name: MICHAEL BOROWIEC et al., Appellees, v. GATEWAY 2000, INC., Appellant
Court: Illinois Supreme Court
Jurisdiction: Illinois
Decision Date: 2004-04-01
Citations: 209 Ill. 2d 376
Docket Number: No. 94235
Parties: MICHAEL BOROWIEC et al., Appellees, v. GATEWAY 2000, INC., Appellant.
Judges: 
Reporter: Illinois Reports, Second Series
Volume: 209
Pages: 376–428

Head Matter:
(No. 94235.
MICHAEL BOROWIEC et al., Appellees, v. GATEWAY 2000, INC., Appellant.
Opinion filed April 1, 2004.
KILBRIDE, J., joined by RARICK, J., dissenting.
RARICK, J., joined by KILBRIDE, J., also dissenting.
James D. Adducci and Marshall L. Blankenship, of Adducci, Dorf, Lehner, Mitchell & Blankenship, EC., of Chicago, and Mark R. Kravitz and Sandra Slack Glover, of Wiggin & Dana, L.L.E, of New Haven, Connecticut, for appellants.
Adam J. Krohn, of Krohn & Moss, Ltd., and Andrew E Lamis, both of Chicago, for appellees.
Howard L. Teplinsky, of Seidler & McErlean, of Chicago, and Robin S. Conrad, of Washington, D.C., for amicus curiae Chamber of Commerce of the United States of America.
Howard L. Teplinsky, of Seidler & McErlean, of Chicago, and Michael Eetricone, of Arlington, Virginia, for amicus curiae Consumer Electronics Association.
Dom J. Rizzi and Christopher B. Sanchez, of Miller, Faucher & Cafferty, L.L.E, of Chicago, and Kevin E Roddy, of Hagens Berman, L.L.E, of Los Angeles, California, for amicus curiae National Association of Securities and Commercial Law Attorneys.

Opinion:
JUSTICE FREEMAN
delivered the opinion of the court:
In this appeal, we consider whether the circuit court of Cook County erred in denying the motion to dismiss or to compel arbitration filed by Gateway 2000, Inc. (Gateway), in each of three cases seeking, inter alia, damages for breach of express and implied warranties under the Magnuson-Moss Warranty — Federal Trade Commission Improvement Act (15 U.S.C. § 2301 et seq. (1994)), and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1998)). The appellate court consolidated the cases and affirmed the circuit court's denial of each motion to dismiss or to compel arbitration. 331 Ill. App. 3d 842. We granted Gateway's petition for leave to appeal pursuant to Supreme Court Rule 315 (177 Ill. 2d R. 315), and now reverse and remand for further proceedings.
BACKGROUND
A. Michael Borowiec
In November 1999, plaintiff Michael Borowiec purchased a Gateway Performance 600 PC computer and a three-year parts and on-site labor services contract from Gateway. In connection with the purchase, Gateway extended a limited money-back guarantee to Borowiec, upon notification to Gateway within 30 days of shipment of the computer and prompt return of the computer. Gateway also warranted that the computer was free from defects in materials and workmanship. Both the "Labor Services Service Contract" and the "Limited Warranty Agreement" contained a dispute resolution clause whereby the parties agreed that any dispute between them would be "resolved exclusively and finally by arbitration administered by the National Arbitration Forum (NAF) and conducted under its rules."
In June 2000, Borowiec filed a complaint against Gateway in the circuit court of Cook County. In the complaint, Borowiec alleged that the computer had numerous defects and nonconformities. Borowiec also alleged that Gateway refused to perform on-site repair of the computer. As a consequence, Borowiec delivered the computer to Gateway on numerous occasions for repair. Gateway was unable to repair the computer to Borowiec's satisfaction. On May 13, 2000, Borowiec revoked his acceptance of the computer. The complaint sought damages for breach of written and implied warranties pursuant to the Magnuson-Moss Warranty — Federal Trade Commission Improvement Act (Magnuson-Moss Act or MMWA) (15 U.S.C. § 2301 et seq. (1994)), violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 1998)), and common law fraud.
On September 1, 2000, Gateway filed a motion to dismiss the complaint, pursuant to section 2 — 615 of the Code of Civil Procedure (735 ILCS 5/2 — 615 (West 2000)), for lack of subject matter jurisdiction and to compel arbitration. The circuit court denied the motion to dismiss and Gateway appealed.
B. Dorota and Tadeusz Kobik
In January 2001, plaintiffs Dorota and Tadeusz Kobik purchased a Gateway Performance 1000 PC computer, and a one-year on-site service, three-year labor and parts contract from Gateway. In connection with the purchase, Gateway extended a limited money-back guarantee to the Kobiks, upon notification to Gateway within 30 days of shipment of the computer and prompt return of the computer. Gateway also warranted that the computer was free from defects in materials and workmanship. The "Limited Warranty Agreement" contained a dispute resolution clause whereby the parties agreed that any dispute between them would be resolved exclusively and finally by arbitration administered by the NAF.
In October 2001, the Kobiks filed a complaint against Gateway in the circuit court of Cook County. In the complaint, the Kobiks alleged that the computer had numerous defects and nonconformities, including a defective hard drive. The Kobiks also alleged that Gateway refused to perform on-site repair of the computer. As a consequence, the Kobiks delivered the computer to Gateway on numerous occasions for repair. Gateway was unable to repair the computer and the Kobiks lost confidence in the computer's reliability. On August 30, 2001, the Kobiks revoked their acceptance of the computer. The complaint sought damages for breach of written and implied warranties pursuant to the MagnusonMoss Act and violation of the Consumer Fraud Act.
Pursuant to section 2 — 619 of the Code of Civil Procedure (735 ILCS 5/2 — 619 (West 2000)), on October 22, 2001, Gateway filed a motion to dismiss the complaint or, in the alternative, to compel arbitration and stay the proceedings pending completion of arbitration. The circuit court denied the motion and Gateway appealed.
C. Leslie Waldron
In November 2000, plaintiff Leslie Waldron purchased a Gateway Essential 866 computer and a labor services contract from Gateway. In connection with the purchase, Gateway extended a limited money-back guarantee to Waldron, upon notification to Gateway within 30 days of shipment of the computer and prompt return of . the computer. Gateway also warranted that the computer was free from defects in materials and workmanship. The "Limited Warranty Agreement" contained a dispute resolution clause whereby the parties agreed that any dispute between them would be resolved exclusively and finally by arbitration administered by the NAF.
In November 2001, Waldron filed a complaint against Gateway in the circuit court of Cook County. In the complaint, Waldron alleged that shortly after the purchase the computer exhibited numerous defects and nonconformities, including a defective CD-ROM, motherboard, power supply, and processor. Waldron also alleged that Gateway refused to perform on-site repair of the computer and required that Waldron bring the computer to Gateway's facility for repairs. Waldron delivered the computer to Gateway on numerous occasions for repair. Gateway was unable to repair the computer, and Waldron lost confidence in the computer's reliability. On October 1, 2001, Waldron revoked her acceptance of the computer. The complaint sought damages for breach of written and implied warranties pursuant to the Magnuson-Moss Act, revocation of acceptance pursuant to the Magnuson-Moss Act, and violation of the Consumer Fraud Act.
Pursuant to section 2 — 619 of the Code of Civil Procedure (735 ILCS 5/2 — 619 (West 2000)), on November 21, 2001, Gateway filed a motion to dismiss the complaint or, in the alternative, to compel arbitration and stay the proceedings pending completion of arbitration. The circuit court denied the motion, and Gateway appealed.
D. Common Facts
In the consolidated appeals, the appellate court held that the Magnuson-Moss Act precluded binding arbitration of the consumer disputes. 331 Ill. App. 3d at 848. The court reasoned that Congress intended to preserve a judicial forum for consumers. 331 Ill. App. 3d at 848. Gateway's limited warranty agreement, with its binding arbitration clause, violated the Magnuson-Moss Act and was therefore unenforceable. 331 Ill. App. 3d at 851. Accordingly, the court affirmed the decisions of the circuit court denying Gateway's motion to dismiss and compel arbitration.
We granted Gateway's petition for leave to appeal. We allowed the Chamber of Commerce of the United States of America and the Consumer Electronics Association to file an amicus curiae brief in support of Gateway. We also allowed the National Association of Securities and Commercial Law Attorneys to file an amicus curiae brief in support of the plaintiffs.
ANALYSIS
A. Standard of Review
As noted above, Gateway filed a motion to dismiss Borowiec's complaint for lack of subject matter jurisdiction and to compel arbitration pursuant to section 2 — 615 of the Code of Civil Procedure. See 735 ILCS 5/2 — 615 (West 2000). In the actions initiated by Waldron and the Kobiks, Gateway filed motions to dismiss and to compel arbitration pursuant to section 2 — 619 of the Code of Civil Procedure. See 735 ILCS 5/2 — 619 (West 2000). A section 2 — 615 motion to dismiss attacks the legal sufficiency of the complaint. Illinois Graphics Co. v. Nickum, 159 Ill. 2d 469, 484 (1994). Such a motion does not raise affirmative factual defenses, but alleges only defects appearing on the face of the complaint. Illinois Graphics, 159 Ill. 2d at 484; Kolegas v. Heftel Broadcasting Corp., 154 Ill. 2d 1, 8 (1992). Thus, the question presented by a section 2 — 615 motion is whether the allegations of the complaint, when viewed in a light most favorable to the plaintiff, are sufficient to state a cause of action upon which relief can be granted. Vernon v. Schuster, 179 Ill. 2d 338, 344 (1997); Bryson v. News America Publications, Inc., 174 Ill. 2d 77, 86-87 (1996). When ruling on a section 2 — 615 motion, a trial court is to dismiss the cause of action only if it is clearly apparent that no set of facts can be proven which will entitle the plaintiff to recovery. Bryson, 174 Ill. 2d at 86-87; Illinois Graphics, 159 Ill. 2d at 488. A court of review determines de novo whether the trial court should have granted dismissal. Beahringer v. Page, 204 Ill. 2d 363, 369 (2003).
In contrast, a section 2 — 619 motion provides for the involuntary dismissal of a cause of action based on certain defects or defenses. Amongst the enumerated grounds for a section 2 — 619 dismissal are that the court does not have jurisdiction of the subject matter of the action (735 ILCS 5/2 — 619(a)(1) (West 2000)) and that the claim asserted is barred by other affirmative matter which avoids the legal effect of or defeats the claim (735 ILCS 5/2 — 619(a)(9) (West 2000)). Affirmative matter must be supported by affidavit, unless apparent on the face of the pleading attacked (735 ILCS 5/2 — 619(a) (West 2000)), and, in ruling on the motion, the trial court must interpret all pleadings and supporting documents in the light most favorable to the nonmoving party. In re Chicago Flood Litigation, 176 Ill. 2d 179, 189 (1997). The standard of review on appeal is de novo. Weatherman v. Gary-Wheaton Bank of Fox Valley, N.A., 186 Ill. 2d 472, 480 (1999); Chicago Flood Litigation, 176 Ill. 2d at 189.
Initially we note that Gateway's motion to dismiss Borowiec's complaint was for lack of subject matter jurisdiction and was supported by affidavit. The motion was more appropriately designated a motion pursuant to section 2 — 619 than a motion pursuant to section 2 — 615. Borowiec, however, was not prejudiced by the improper designation, and responded appropriately to the motion. Accordingly, we will consider the motion as though it had been filed under section 2 — 619. Wallace v. Smyth, 203 Ill. 2d 441, 447 (2002); City of Burbank v. Czaja, 331 Ill. App. 3d 369, 374 (2002).
B. Federal Arbitration Act
Turning to the merits of the appeal, we consider first the history and purpose of the Federal Arbitration Act (Arbitration Act or FAA) (9 U.S.C. § 1 et seq. (1994)). Congress enacted the Arbitration Act in 1925 "to reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements upon the same footing as other contracts." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 114 L. Ed. 2d 26, 36, 111 S. Ct. 1647, 1651 (1991). The Arbitration Act provides:
"A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction * shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2 (1994).
The Arbitration Act also provides for orders compelling arbitration when one party has failed, neglected, or refused to comply with an arbitration agreement. 9 U.S.C. § 4 (1994). The Arbitration Act reflects a "liberal federal policy favoring arbitration agreements." Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24, 74 L. Ed. 2d 765, 785, 103 S. Ct. 927, 941 (1983).
In Gilmer, 500 U.S. 20, 114 L. Ed. 2d 26, 111 S. Ct. 1647, the Court commented on the interplay between the Arbitration Act and statutory remedies created by Congress. The Court observed:
"It is by now clear that statutory claims may be the subject of an arbitration agreement, enforceable pursuant to the FAA. Indeed, in recent years we have held enforceable arbitration agreements relating to claims arising under the Sherman Act, 15 U.S.C. § 1-7; § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b); the civil provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq.; and § 12(2) of the Securities Act of 1933, 15 U.S.C. § 77l(2). [Citations.] In these cases we recognized that '[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum.' [Citation.]
Although all statutory claims may not be appropriate for arbitration, '[h]aving made the bargain to arbitrate, the party should be held to it unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue.' [Citation.] In this regard, we note that the burden is on [the plaintiff] to show that Congress intended to preclude a waiver of a judicial forum for [the statutory] claims. [Citation.] If such an intention exists, it will be discoverable in the text of the [act], its legislative history, or an 'inherent conflict' between arbitration and the [act's] underlying purposes. [Citation.] Throughout such an inquiry, it should be kept in mind that 'questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration.' " Gilmer, 500 U.S. at 26, 114 L. Ed. 2d at 37, 111 S. Ct. at 1652.
Lastly, in Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 684-85, 134 L. Ed. 2d 902, 907, 116 S. Ct. 1652, 1655 (1996), the Supreme Court commented on the preemptive effect of the Arbitration Act:
"In Southland, we held that § 2 of the FAA applies in state as well as federal courts [citation] and 'withdr[aws] the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration,' [citation]. We noted in the path-marking Southland decision that the FAA established a 'broad principle of enforceability,' [citation], and that § 2 of the federal Act provided for revocation of arbitration agreements only upon 'grounds as exist at law or in equity for the revocation of any contract.' In Perry, we reiterated: '[S]tate law, whether of legislative or judicial origin, is applicable if that law arose to govern issues concerning the validity, revocability, and enforceability of contracts generally. A state-law principle that takes its meaning precisely from the fact that a contract to arbitrate is at issue does not comport with [the text of § 2].' [Citation.]" (Emphasis in original.)
In the present case, both the labor services service contract and the limited warranty agreement contained a dispute resolution clause whereby the parties agreed that any dispute between them would be resolved by binding arbitration. Thus, the claims advanced by the plaintiffs are subject to arbitration unless the plaintiffs show that Congress intended to preclude a waiver of a judicial forum for their federal statutory claims. Further, plaintiffs' state law claims may not be premised solely on the fact that a contract to arbitrate is at issue. We turn then to provisions of the Magnuson-Moss Act.
C. The Magnuson-Moss Act
The Magnuson-Moss Act was enacted in 1975 to "improve the adequacy of information available to consumers, prevent deception, and improve competition in the marketing of consumer products." 15 U.S.C. § 2302(a) (1994). To that end, the Magnuson-Moss Act establishes standards governing the content of consumer product warranties and service contracts. 15 U.S.C. § 2301 through 2308 (1994). The Magnuson-Moss Act also provides a statutory private right of action to consumers who are "damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this chapter, or under a written warranty, implied warranty, or service contract." 15 U.S.C. § 2310(d)(1) (1994). The consumer may bring an action in either federal or state court and may recover costs and expenses that were reasonably incurred in connection with the commencement and prosecution of the action. As part of costs and expenses, the consumer may recover attorney fees, unless the court determines that such an award is inappropriate. 15 U.S.C. § 2310(d)(2) (1994).
The Magnuson-Moss Act does not expressly prohibit arbitration, and, in fact, does not refer either to binding arbitration or to the Arbitration Act. The MagnusonMoss Act does provide, however, that, prior to filing an action for failure to comply with any obligation under a written or implied warranty or service contract, a consumer give the person obligated under the warranty or service contract a reasonable opportunity to cure such failure to comply. 15 U.S.C. § 2310(e) (1994). Also, the Magnuson-Moss Act provides for the establishment of informal dispute settlement mechanisms, and authorizes the Federal Trade Commission (FTC) to prescribe rules setting forth the minimum requirements for the procedures. 15 U.S.C. § 2310(a) (1994). If a warrantor establishes an informal dispute settlement procedure which complies with the requirements of the FTC rules, and the warrantor incorporates in a written warranty a requirement that the consumer resort to such procedure, the consumer may not commence a civil action unless he initially resorts to the procedure. 15 U.S.C. § 2310(a)(3) (1994). Furthermore, in any civil action instituted by a consumer "arising out of a warranty obligation and relating to a matter considered in [the informal dispute resolution] procedure, any decision in such procedure shall be admissible in evidence." 15 U.S.C. § 2310(a)(3) (1994). The Magnuson-Moss Act nowhere defines the terms "informal dispute settlement procedures" and "informal dispute settlement mechanisms."
In enforcing the Magnuson-Moss Act, the FTC has determined that decisions of an informal dispute settlement mechanism "shall not be legally binding on any person" (16 C.F.R. § 703.5(j) (2003)) and has defined the term "mechanism" broadly to include binding arbitration. 40 Fed. Reg. 60167, 60210, 60211, 60218 (1975). The FTC has also ruled that "[a] warrantor shall not indicate in any written warranty or service contract either directly or indirectly that the decision of the warrantor, service contractor, or any designated third party is final or binding in any dispute concerning the warranty or service contract." 16 C.F.R. § 700.8 (2003). In 1999, the FTC affirmed that the regulations "will continue to prohibit warrantors from including binding arbitration clauses in their contracts with consumers that would require consumers to submit warranty disputes to binding arbitration." 64 Fed. Reg. 19700, 19708-09 (1999).
D. Binding Arbitration
The appellate court recognized that federal policy strongly favors the judicial enforcement of arbitration agreements. 331 Ill. App. 3d at 847. However, from its examination of the text of the Magnuson-Moss Act, the appellate court determined it was Congress' intent to ultimately preserve a judicial forum for consumers. 331 Ill. App. 3d at 848. In arriving at this conclusion, the appellate court noted the Magnuson-Moss Act provides that a decision in an informal dispute resolution procedure shall be admissible in evidence in any civil action arising out of a warranty obligation and relating to a matter considered in the informal dispute resolution procedure. 331 Ill. App. 3d at 849. The appellate court opined that an informal dispute settlement procedure is a prerequisite, not a bar, to relief in court. 331 Ill. App. 3d at 849. The appellate court also referenced legislative history to the effect that an informal dispute settlement procedure is not a bar to legal action. 331 Ill. App. 3d at 849-50. Lastly, the appellate court relied on the FTC's ruling that informal dispute resolution mechanisms, including arbitration, may not be binding upon the consumer.
In this court, plaintiffs urge affirmance of the appellate court decision. Plaintiffs ask that we defer to the FTC's interpretation of the Magnuson-Moss Act and argue that the agency's interpretation is supported by the legislative history of the Act. Plaintiffs also maintain that, while the Arbitration Act policy favoring arbitration and the Magnuson-Moss Act consumer protection objectives are generally not in conflict, a conflict arises when a binding arbitration clause is inserted in an agreement purporting to extend a warranty to the consumer. Plaintiffs believe this conflict must be resolved by giving precedence to the Magnuson-Moss Act over the Arbitration Act. We disagree with the reasoning of the appellate court and the arguments advanced by plaintiffs.
In arriving at our decision, we note that the federal circuits which have considered the issue have rejected the FTC's interpretation. We find the Fifth Circuit's analysis in Walton v. Rose Mobile Homes LLC, 298 F.3d 470 (5th Cir. 2002), particularly helpful. In Walton, the court of appeals reversed the district court's order denying the manufacturer's motion to compel arbitration of the consumer's Magnuson-Moss claim. The court first examined the roles of the judiciary and the FTC in interpreting the Magnuson-Moss Act:
"When we review an agency's construction of a statute that it administers, we must defer to that agency's interpretation of the statute if: (1) Congress has not spoken directly to the issue; and (2) the agency's interpretation 'is based on a permissible construction of the statute.' [Citation.] 'The judiciary is the final authority on issues of statutory construction and must reject administrative constructions which are contrary to clear congressional intent . If a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect.' " Walton, 298 F.3d at 475.
Next, the court examined the text of the Magnuson-Moss Act:
"The text of the MMWA does not specifically address binding arbitration, nor does it specifically allow the FTC to decide whether to permit or to ban binding arbitration. Although the MMWA allows warrantors to require that consumers use 'informal dispute settlement procedures' before filing a suit in court, and allows the FTC to establish rules governing these procedures, it does not define 'informal dispute settlement procedure.' However, the MMWA does make clear that these are to be used before fifing a claim in court. Yet binding arbitration generally is understood to be a substitute for filing a lawsuit, not a prerequisite. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S. Ct. 3346, 87 L. Ed. 2d 444 (1985) ('By agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial forum.')
We also note that binding arbitration is not normally considered to be an 'informal dispute settlement procedure,' and it therefore seems to fall outside the bounds of the MMWA and of the FTC's power to prescribe regulations. We thus conclude that the text of the MMWA does not evince a congressional intent to prevent the use of binding arbitration." (Emphasis omitted.) Walton, 298 F.3d at 475-76.
The court then considered the legislative history of the Magnuson-Moss Act:
"The legislative history does not specifically discuss the availability of arbitration, nor does it define or shed light on the meaning of 'informal dispute settlement procedure.' The legislative history does indicate that such procedures were meant to be non-binding. For example, the House Report on the MMWA states that '[a]n adverse decision in any informal dispute settlement procedure would not be a bar to a civil action on the warranty involved in the proceeding . .' H.R. Rep. No. 93 — 1107 (1974), reprinted in 1974 U.S.C.C.A.N. 7702, 7723. The Conference Committee report also indicates that if a consumer chooses not to pursue an informal dispute settlement procedure, a consumer can still pursue 'all alternative avenues of redress.' S. Conf. Rep. No. 93—1408 (1974), reprinted in 1974 U.S.C.C.A.N. 7755, 7758. However, there is still no evidence that Congress intended binding arbitration to be considered an informal dispute settlement procedure. Therefore the fact that any informal dispute settlement procedure must be non-binding, does not imply that Congress meant to preclude binding arbitration, which is of a different nature. The legislative history's reference to 'civil action' neither explicitly includes nor precludes binding arbitration. However, the reference to 'informal dispute settlement procedure' seemingly precludes binding arbitration from its scope, as binding arbitration is not normally considered an informal procedure. Binding arbitration simply is not part of these reports. These passages therefore do not support an assertion that Congress intended to preclude binding arbitration. Additionally, the Conference Committee Report states that the legislation requires 'provision [by the warrantor] for governmental or consumer participation in internal or other private dispute settlement procedures . .' Id. Again, this does not indicate an intent to preclude binding arbitration. It simply requires that the consumer (or perhaps the government) participate in the informal procedures established by the warrantor. The Committee cannot have had in mind binding arbitration in its comments, as the government does not normally participate in private binding arbitration procedures. Again, these congressional reports do not demonstrate that Congress intended for binding arbitration to be included within the scope of these informal dispute settlement procedures, nor that it intended to preclude binding arbitration under the MMWA.'' Walton, 298 F.3d at 476-77.
Lastly, the court examined the purposes of the MagnusonMoss Act and considered whether they conflicted with the Arbitration Act:
"We do not see any inherent conflict between arbitration and these purposes. Consumers can still vindicate their rights under warranties in an arbitral forum. Warranties can provide adequate and truthful information to consumers, while also requiring binding arbitration. Arbitration is not inherently unfair to consumers. See Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 280, 115 S. Ct. 834, 130 L. Ed. 2d 753 (1995) ('Congress, when enacting the [FAA], had the needs of consumers . in mind.') Although the legislative history of the MMWA expresses a concern with the unequal bargaining power of consumers, see S. Rep. No. 93 — 151, at 22-23 (1973), a perception of unequal bargaining power is not enough to unilaterally hold arbitration agreements unenforceable. See Gilmer, 500 U.S. at 33, 111 S. Ct. 1647. Of course, courts can consider individual claims of fraud or unconscionability in arbitration agreements as they would in any other contract. See id. We thus can find no inherent conflict between the MMWA and the FAA." Walton, 298 F.3d at 478.
The court concluded that the text, legislative history, and purposes of the Magnuson-Moss Act do not evince a congressional intent to bar arbitration of written warranty claims. There being no doubt that Congress has expressed a clear intention in favor of arbitration, the court held the plaintiffs signed a valid binding arbitration agreement and must arbitrate their Magnuson-Moss claims. Walton, 298 F.3d at 478.
Similarly, in Davis v. Southern Energy Homes, Inc., 305 F.3d 1268 (11th Cir. 2002), the court of appeals rejected the FTC's interpretation of the Magnuson-Moss Act. In doing so, the court employed an analysis similar to that used by the Walton court. The court reviewed the text and legislative history of the Magnuson-Moss Act as well as the purposes of the Magnuson-Moss Act and the Arbitration Act. The court found that the text of the Magnuson-Moss Act does not expressly prohibit arbitration. Davis, 305 F.3d at 1274-75. Further, Congress did not express a clear intent in the legislative history of the Magnuson-Moss Act to bar binding arbitration agreements in written warranties. Davis, 305 F.3d at 1274-77. The court also found that the declared purposes of the Magnuson-Moss Act do not evince such a conflict with the Arbitration Act as to prohibit binding arbitration of Magnuson-Moss claims. Davis, 305 F.2d at 1277.
Unlike the Walton court, however, the court in Davis also examined the reasonableness of the FTC's construction of the statute. Initially, the Davis court differentiated between the FTC's legislative regulations and the FTC's interpretive regulations. The court noted that the Chevron (Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 81 L. Ed. 2d 694, 104 S. Ct. 2776 (1984)) standard of deference applies to the FTC's legislative regulations and not to the interpretive regulations. The court observed that "while we must defer to the legislative regulations in 16 C.F.R. § 701.1— 703.8 (2002) if they are reasonable, the FTC's interpretive regulations are only 'entitled to respect' to the extent they 'have the power to persuade.' " Davis, 305 F.3d at 1278 n.7.
Turning to the legislative regulations, the court noted that the FTC based its construction on Congress' grant of concurrent jurisdiction. The court observed, however, that a statute's provision for a judicial forum does not preclude enforcement of a binding arbitration agreement under the Arbitration Act. Consequently, the court concluded that the FTC's motive behind the legislative regulation is unreasonable. Davis, 305 F.3d at 1280. The court then referred to the FTC's interpretive regulations:
"The FTC further explained that binding arbitration agreements are not allowed in written warranties for several reasons:
First, as the Staff Report indicates, Congressional intent was that decisions of Section 110 Mechanisms not be legally binding. Second, even if binding Mechanisms were contemplated by Section 110 of the Act, the Commission is not prepared, at this point in time, to develop guidelines for a system in which consumers would commit themselves, at the time of product purchase, to resolve any difficulties in a binding, hut non-judicial, proceeding. The Commission is not now convinced that any guidelines which it set out could ensure sufficient protection for consumers. 40 Fed. Reg. 60167, 60210 (1975)." Davis, 305 F.3d at 1278-79.
The court noted this rationale was also unreasonable:
"Although the FTC first stated that it looked to a subcommittee staff report (which appears to no longer be attainable) to determine Congress's intent, the FTC continued, evincing its major concern that an arbitral forum will not adequately protect the individual consumers. The Supreme Court in McMahon, however, rejected this same hostility shown by the SEC. 482 U.S. at 234 n.3, 107 S. Ct. at 2341 n.3 (declining to defer to the SEC's interpretation of the Securities Exchange Act of 1934 based on the SEC's Wilko attitude). Instead, the Supreme Court holds that arbitration is favorable to the individual. See Allied-Bruce Terminix Cos., 513 U.S. at 279, 115 S. Ct. at 842-43 (noting that 'arbitration's advantages often would seem helpful to individuals, say, complaining about a product, who need a less expensive alternative to litigation.')" Davis, 305 F.3d at 1279.
The court concluded, "[a]fter a thorough review of the MMWA and the FAA, combined with the strong federal policy favoring arbitration," that written warranty claims arising under the Magnuson-Moss Warranty Act may be subject to valid binding arbitration agreements. Davis, 305 F.3d at 1280. See also Southern Energy Homes, Inc. v. Ard, 772 So. 2d 1131 (Ala. 2000); In re American Homestar of Lancaster, Inc., 50 S.W.3d 480 (Tex. 2001); Stacy David, Inc. v. Consuegra, 845 So. 2d 303 (Fla. App. 2003); Abela v. General Motors Corp., 257 Mich. App. 513, 669 N.W.2d 271 (2003); but see contra Parkerson v. Smith, 817 So. 2d 529 (Miss. 2002).
We also take note of the holding of Harrison v. Nissan Motor Corp., 111 F.3d 343 (3d Cir. 1997). In Harrison, the defendant moved to dismiss the complaint because the plaintiff had failed to resort to an informal dispute resolution procedure provided by the defendant pursuant to the Pennsylvania Automobile Lemon Law. By the terms of the Lemon Law, the alternative dispute resolution procedure provided by the manufacturer had to comply with the FTC regulations promulgated under the Magnuson-Moss Act. The FTC regulations at issue required alternative dispute resolution mechanisms to render a decision within 40 days of notification of the dispute. 16 C.F.R. § 703.5(d) (2003). The regulations also provided that a "requirement that a consumer resort to the Mechanism prior to commencement of an action * shall be satisfied 40 days after notification to the Mechanism of the dispute or when the Mechanism completes all of its duties under * this section, whichever occurs sooner." 16 C.F.R. § 703.5(i) (2003). The district court denied the motion to dismiss and the defendant appealed, arguing that the district court order denying the motion to dismiss was equivalent to an order denying a motion to compel arbitration under the Arbitration Act.
On appeal, the Third Circuit noted that for the Arbitration Act to apply, the party seeking to compel arbitration was required to show the existence of a written agreement that contained an arbitration clause and affected interstate commerce. Harrison, 111 F.3d at 348. The court found there was an "agreement qua agreement" between the parties to submit the dispute to the alternative dispute resolution mechanism. Harrison, 111 F.3d at 348 n.8. Although the warranty stated that the use of the mechanism was voluntary, and it alone did not constitute a sufficient written agreement, the warranty constituted an offer for dispute resolution that was accepted by the written request for dispute resolution sent by plaintiffs counsel to the mechanism. Harrison, 111 F.3d at 348 n.8. However, the alternative dispute resolution procedure at issue was not "arbitration" within the meaning of the Arbitration Act. The court explained:
"Although it defies easy definition, the essence of arbitration, we think, is that, when the parties agree to submit their disputes to it, they have agreed to arbitrate these disputes through to completion, i.e. to an award made by a third-party arbitrator. Arbitration does not occur until the process is completed and the arbitrator makes a decision. Hence, if one party seeks an order compelling arbitration and it is granted, the parties must then arbitrate their dispute to an arbitrators' decision and cannot seek recourse to the courts before that time. [Citation.]
But the informal alternative dispute resolution process contemplated by the Lemon Law does not fit this characterization. Rather, while many cases in which claimants invoke the informal process will proceed to an arbitrator's award, some will not. That is because, under the FTC regulations with which a mechanism must comply, a dissatisfied car owner can file suit under the Lemon Law if he or she has not received a decision from the arbitrator after forty days. In other words, whatever the meaning of the 'first resort' requirement, a claimant cannot be barred from pursuing litigation under the Lemon Law if the mechanism delays for more than forty days. The claimant would not, therefore, pursue the procedure to completion in all cases. Under all these circumstances, the informal dispute resolution mechanism provided for by Nissan pursuant to the Lemon Law does not constitute arbitration within the meaning of the FAA.
We find further support for the conclusion that the FAA does not apply to Lemon Law ADR procedures in the fact that the Lemon Law, the Magnuson-Moss Warranty Act, and the FTC regulations all refer to the procedure at issue as an 'informal dispute resolution procedure.' If the drafters had intended this procedure to be cognizable under the FAA, then it is likely that they would have referred to it as 'arbitration.' Indeed, the term 'arbitration' has come into this case solely because the [Mechanism] has labeled the second part of its procedures 'arbitration.' That alone is not sufficient to trigger the FAA. We, therefore, hold that Harrison and Nissan did not enter into a contract to arbitrate their dispute within the meaning of the FAA and that we lack jurisdiction over Nissan's appeal." Harrison, 111 F.3d at 350-51.
As noted above, the FTC believes that informal dispute resolution procedures include arbitration. Further, according to the FTC, an agreement which contains a binding arbitration clause violates the provisions of the Magnuson-Moss Act because the Act provides that informal dispute resolution procedures cannot be binding on the consumer. By holding that an informal dispute resolution procedure does not qualify as "arbitration" under the Arbitration Act, Harrison calls into question the FTC's interpretation of the Magnuson-Moss Act.
In Busch v. Graphic Color Corp., 169 Ill. 2d 325, 335 (1996), quoting Bowman v. Illinois Central R.R. Co., 11 Ill. 2d 186, 200 (1957), this court observed that "decisions of the Federal courts interpreting a Federal act * are controlling upon Illinois courts, 'in order that the act be given uniform application.' " See also Sundance Homes, Inc. v. County of Du Page, 195 Ill. 2d 257, 266 (2001); Wilson v. Norfolk & Western Ry. Co., 187 Ill. 2d 369, 383 (1999); Boyer v. Atchison, Topeka & Santa Fe Ry. Co., 38 Ill. 2d 31, 34-35 (1967). This court has also noted that support for an agency's administrative pronouncements must be abandoned where the pronouncements are found by a reviewing court to be at odds with the law. Castillo v. Jackson, 149 Ill. 2d 165, 189 (1992). As discussed above, in Walton and Davis, the Fifth Circuit and the Eleventh Circuit ruled that the FTC's interpretation of the Magnuson-Moss Act is incorrect and a clause requiring binding arbitration of a consumer's claim does not violate the statute. And in Harrison, the Third Circuit cast doubt upon the FTC's ruling that informal dispute resolution procedures include arbitration. Accordingly, the federal circuit courts of appeals are in agreement in their interpretation of this federal statute. Because federal circuit court authority on the issue is uniform, we, too, hold that the Magnuson-Moss Act does not bar arbitration of a consumer's claims under the Act. See Weiland v. Telec tronics Pacing Systems, Inc., 188 Ill. 2d 415, 422-23 (1999).
E. Other Issues
In this court, plaintiffs raise additional issues regarding the validity of the arbitration clauses. Plaintiffs argue that the arbitration clauses are inconspicuous and are not "disclose[d] in simple and readily understood language," thus violating section 2302(a) of the Magnuson-Moss Act and the FTC regulations. Plaintiffs also argue that the arbitration clauses contain a fee-shifting provision and are therefore illegal under the Arbitration Act. Lastly, plaintiffs argue that the arbitration clauses are unenforceable, under ordinary state law principles, because of the fee-shifting provision and because there are exorbitant charges for the use of the arbitration procedure. We note that the complaints do not contain allegations in support of these claims and plaintiffs did not raise these arguments in the memoranda they filed in opposition to Gateway's motions to dismiss. We also note that the appellate court did not address the additional issues plaintiffs now raise. Lastly, we note that in Hill v. Gateway 2000, Inc., 105 F.3d 1147 (7th Cir. 1997), the court required two customers who purchased a Gateway 2000 computer to submit their claims against Gateway to arbitration. In doing so, the court rejected several challenges to the validity of the Gateway arbitration clause. In light of these circumstances, we elect not to address plaintiffs' additional arguments.
CONCLUSION
For the reasons stated above, in the absence of such grounds as exist at law or in equity for the revocation of any contract, the circuit court should have granted Gateway's motions to dismiss the complaints and compel arbitration. The judgments of the appellate and circuit courts are therefore reversed and the causes are remanded to the circuit court for proceedings consistent with this opinion.
Appellate court judgment reversed; circuit court judgments reversed; causes remanded.
As to all the plaintiffs, we note that the claims for violation of the Consumer Fraud Act are premised on the alleged violations of the Magnuson-Moss Act. The plaintiffs allege that Gateway's requirement that the plaintiffs submit the disputes to final and binding arbitration is deceptive and constitutes a violation of the Consumer Fraud Act.