Opinion ID: 2510516
Heading Depth: 1
Heading Rank: 6

Heading: Does the Arbitration Clause Apply to Claims Alleged Under the Idaho Consumer Protection Act?

Text: Dan Wiebold's amended complaint alleges various claims under the Idaho Consumer Protection Act (ICPA). The district court found that such claims were within the scope of the Agreement's arbitration clause, which provides: Except as provided otherwise in this Agreement, all disputes, claims, controversies and other matters in question between the parties to this Agreement, arising out of, or relating to this Agreement, or to the breach thereof, including any claim in which either party is demanding monetary damages of any nature including negligence, strict liability or intentional acts or omissions by either party, and which cannot be resolved by the parties, shall be settled by arbitration in accordance with the arbitration procedure described below. Under Michigan law, the question of whether a dispute is arbitrable is for the court's determination. Kentwood Public Schools v. Kent County Educ. Ass'n, 206 Mich.App. 161, 520 N.W.2d 682 (1994). A contracting party who would exclude a matter from a general arbitration clause in the contract must do so expressly and explicitly. Kaleva-Norman-Dickson School Dist. No. 6 v. Kaleva-Norman-Dickson School Teachers' Ass'n, 393 Mich. 583, 227 N.W.2d 500 (1975). The arbitration clause in a contract will apply to any dispute that is arguably within the scope of the clause, and any doubts about the arbitrability of an issue should be resolved in favor of arbitration. Watts v. Polaczyk, 242 Mich.App. 600, 619 N.W.2d 714 (2000). The court's inquiry is limited to whether the issue is arguably within the scope of the arbitration clause. Kentwood Public Schools v. Kent County Educ. Ass'n, 206 Mich.App. 161, 520 N.W.2d 682 (1994). Under Michigan law, statutory claims can be subject to arbitration even when the arbitration clause does not expressly mention statutory claims. Rembert v. Ryan's Family Steak Houses, Inc., 235 Mich.App. 118, 596 N.W.2d 208 (1999). The arbitration clause in the Agreement is very broad. It includes all disputes, claims, controversies and other matters in question between the parties to this Agreement, arising out of, or relating to this Agreement, ... including any claim in which either party is demanding monetary damages of any nature.... That language is broad enough to include claims under the ICPA. Dan Wiebold contends that requiring arbitration of its ICPA claims would contravene public policy because it would be denied the opportunity to seek class relief and injunctive relief. It has not sought either of those forms of relief in this lawsuit. There is nothing in the ICPA expressly prohibiting arbitration of claims brought under that Act. The issue is whether, under Michigan law, such claims are subject to arbitration. In support of its argument, Dan Wiebold relies upon Lozada v. Dale Baker Oldsmobile, Inc., 91 F.Supp.2d 1087 (W.D.Mich. 2000). In that case, a federal district judge held that an arbitration provision was substantively unconscionable under Michigan law because it waived class remedies and failed to grant the arbitrator authority to provide injunctive relief, both of which were expressly available under the Michigan Consumer Protection Act. The Lozada opinion is not persuasive for several reasons. First, as mentioned above, a contractual provision can be held unconscionable under Michigan law only if it is both procedurally and substantively unconscionable. That portion of the Lozada opinion upon which Dan Wiebold relies held that the arbitration agreement in that case was substantively unconscionable. That holding is irrelevant to this case because Dan Wiebold failed to clear the first hurdle of showing that the Agreement was procedurally unconscionable. Second, the arbitration clause at issue in Lozada expressly excluded class relief with a provision stating, The arbitration shall not be consolidated with any other arbitration. The arbitration clause in the parties' Agreement in this case does not exclude class relief, and Dan Wiebold has not provided any authority showing that such relief is unavailable through arbitration. Likewise, it has failed to provide any authority showing that Dan Wiebold could not obtain injunctive relief through arbitration. Third, as the Michigan Supreme Court has noted, the decisions of lower federal courts are not binding on state courts, even on issues of federal law. Abela v. General Motors Corp., 469 Mich. 603, 677 N.W.2d 325 (2004). Such decisions are authoritative only if the reasoning is persuasive. The judge in Lozada stated, Michigan courts will conclude that the contract is adhesive and therefore procedurally unconscionable. 91 F.Supp.2d at 1100. He failed to accurately predict how the Michigan courts would rule on that issue. In Rory v. Continental Insurance Co., 473 Mich. 457, 703 N.W.2d 23 (2005), the Michigan Supreme Court upheld a provision in an automobile insurance policy that required the insured to file a claim or lawsuit for uninsured motorist benefits within one year from the date of the accident, even though the insurance policy was an adhesion contract. After reviewing and rejecting the doctrine that adhesion contracts are subject to close judicial scrutiny, the Michigan Supreme Court concluded, Therefore, we hold that it is of no legal relevance that a contract is or is not described as `adhesive.' In either case, the contract is to be enforced according to its plain language. 703 N.W.2d at 42. In reliance upon the Rory v. Continental Insurance Co. opinion, the Michigan Court of Appeals in Clark v. DaimlerChrysler Corp., 268 Mich.App. 138, 706 N.W.2d 471 (2005), held that it could not even consider whether a contract was one of adhesion when determining if it was procedurally unconscionable. The judge in Lozada was unable to predict accurately how the Michigan Supreme Court would rule on issues relating to substantive unconscionability, and there is no reason to believe he could accurately predict how Michigan courts would rule on the issue of whether claims under the Michigan Consumer Protection Act are subject to arbitration. Finally, the Michigan Court of Appeals has held that the strong public policy favoring arbitration would justify denying class certification. In Salesin v. State Farm Fire & Casualty Co., 229 Mich.App. 346, 581 N.W.2d 781 (1998), the trial court granted summary judgment in favor of the plaintiff and then summarily denied his request for class certification without a hearing. The Court of Appeals vacated the denial because the trial court had denied the requested certification without explanation and apparently without considering the five factors listed in a rule of civil procedure that govern a trial court's discretion regarding class certification. One of the factors was, (e) the maintenance of the action as a class action will be superior to other available methods of adjudication in promoting the convenient administration of justice. The court noted that while State Farm had waived arbitration in the pending case, it may not do so with respect to the claims asserted by other members of the proposed class. It then stated that the trial court could deny class certification based upon factor (e) because maintenance of a class action in the trial court would not be superior to settling disputes between State Farm and other insureds by means of arbitration. In this regard, we note that Michigan law favors arbitration. 581 N.W.2d at 793. Dan Wiebold has not pointed to a single opinion from the Michigan courts holding that claims under the Michigan Consumer Protection Act are not subject to arbitration. Michigan courts have enforced arbitration of claims under that Act, Amtower v. William C. Roney & Co., 232 Mich.App. 226, 590 N.W.2d 580 (1999); Bennett v. Shearson Lehman-American Express, Inc., 168 Mich. App. 80, 423 N.W.2d 911 (1987), although the issue raised by Dan Wiebold here was not raised in those cases. There is no reason to believe, however, that under Michigan law Dan Wiebold's claims asserted under the ICPA would be held not subject to arbitration.