Opinion ID: 75978
Heading Depth: 3
Heading Rank: 3

Heading: McMahon Test

Text: 17 Turning to whether Congress intended to preclude arbitration of a statutory claim, we follow the Supreme Court's McMahon test. McMahon, 482 U.S. at 226-27, 107 S.Ct. at 2337-38. In McMahon, the Supreme Court instructed us to consider three factors in deducing Congress' intent: (1) the text of the statute; (2) its legislative history; and (3) whether an inherent conflict between arbitration and the underlying purposes [of the statute] exists. Id. at 227, 107 S.Ct. at 2338. The party opposing the enforcement of the arbitration agreement has the burden of showing that Congress intended to preclude arbitration of the statutory claim. Id. In applying the McMahon test, questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration. Gilmer, 500 U.S. at 26, 111 S.Ct. at 1652 (quoting Moses H. Cone Mem'l Hosp., 460 U.S. at 24, 103 S.Ct. at 941). Thus, we analyze each factor in turn to determine whether Congress clearly expressed an intention to preclude binding arbitration of MMWA claims. 18
19 The MMWA's text does not expressly prohibit arbitration and, in fact, fails to directly mention either binding arbitration or the FAA. Nevertheless, the Davises argue that the MMWA reserves strictly a judicial forum for consumers by providing a private right of action for consumers. The Supreme Court, however, has held that a statute's provision for a private right of action alone is inadequate to show that Congress intended to prohibit arbitration. Gilmer, 500 U.S. at 29, 111 S.Ct. at 1653-54 (rejecting the argument that binding arbitration is improper because it deprives claimants of the judicial forum provided for by the ADEA). As the Fifth Circuit recently recognized, binding arbitration generally is understood to be a substitute for filing a lawsuit, not a prerequisite. Walton, 298 F.3d at 475 (citing Mitsubishi Motors Corp., 473 U.S. at 628, 105 S.Ct. at 3354) (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 judicial, forum.). Furthermore, the fact that the MMWA grants a judicial forum with concurrent jurisdiction in state and federal courts for MMWA claims is insufficient evidence that Congress intended to preclude binding arbitration. See McMahon, 482 U.S. at 227, 107 S.Ct. at 2338 (rejecting the argument that compulsory arbitration under the Securities Exchange Act of 1934 is improper because the statute provides that [t]he district courts of the United States ... shall have exclusive jurisdiction of violations of this title....); see also Gilmer, 500 U.S. at 29, 111 S.Ct. at 1654 (noting that Congress' grant of concurrent jurisdiction in state and federal courts for ADEA claims is consistent with binding arbitration because arbitration agreements, `like the provision for concurrent jurisdiction, serve to advance the objective of allowing [claimants] a broader right to select the forum for resolving disputes, whether it be judicial or otherwise') (quoting Rodriguez de Quijas, 490 U.S. at 483, 109 S.Ct. at 1921). 20 The Davises also argue that because § 2310(d) lists only two exceptions to the private right of action, the internal dispute settlement procedure referenced in § 2310(a) and the class action exception referenced in § 2310(e), 3 Congress intended to preclude any other method of dispute resolution, including binding arbitration. See Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 19-20, 100 S.Ct. 242, 247, 62 L.Ed.2d 146 (1979) ([W]here a statute expressly provides a particular remedy or remedies, a court must be chary of reading others into it. When a statute limits a thing to be done in a particular mode, it includes the negative of any other mode.) (internal quotations and citations omitted). The § 2310(a) exception to a consumer's private right of action states that, if a warrantor establishes an informal dispute settlement procedure, a consumer must resort to the procedure before pursuing any legal remedy under this section respecting such warranty. 15 U.S.C. § 2310(a)(3)(c). Section 2310(a) also states that the consumer may not commence a civil action ... unless he initially resorts to such procedure and that [i]n any civil action arising out of a warranty obligation and relating to a matter considered in such a procedure, any decision in such procedure shall be admissible in evidence. Id. Based on this language, the Davises assert that Congress intended to allow only non-binding alternative dispute resolution procedures. We disagree. 21 In Cunningham v. Fleetwood Homes of Ga., Inc., we noted that the district court erred in concluding that, standing alone, the presence of the non-binding § 2310 mechanism in the statutory text requires the conclusion that Magnuson-Moss claims may not be the subject of binding arbitration agreements. 253 F.3d 611, 619 (11th Cir.2001). The fact that the MMWA regulates § 2310(a) informal dispute settlement procedures does not mean that the Act precludes a court from enforcing a valid binding arbitration agreement. See id. at 620 (noting that a statute's provision for one out-of-court settlement mechanism does not necessarily preclude the enforcement of all alternative mechanisms); see also Gilmer, 500 U.S. at 29, 111 S.Ct. at 1654 (holding that the ADEA's provision for out-of-court dispute resolution is not inconsistent with permitting arbitration under the FAA and that it even suggests that out-of-court dispute resolution, such as arbitration, is consistent with the statutory scheme established by Congress). Thus, we are unpersuaded that Congress intended to bar binding arbitration agreements in the language of the MMWA. 22
23 The second factor the Supreme Court instructs us to examine in determining Congress' intent to preclude the application of the FAA is the MMWA's legislative history. See McMahon, 482 U.S. at 226-27, 107 S.Ct. at 2338. Like the MMWA's text, its legislative history only addresses internal dispute settlement procedures; it never directly addresses the role of binding arbitration or the FAA. In trying to show that Congress intended to bar binding arbitration, the Davises rely on the MMWA's House Report, which notes that [a]n adverse decision in any informal dispute settlement proceeding 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. 4 The Davises argue that Congress considered all methods of dispute resolution, including arbitration, before allowing warrantors to pursue only informal, non-binding settlement procedures. After a thorough reading of the MMWA's legislative history, we disagree. 24 The Davises have proved only that the MMWA's legislative history is ambiguous at most. When considering a preliminary draft of the MMWA, the Senate reflected that it is Congress' intent that warrantors of consumer products cooperate with government and private agencies to establish informal dispute settlement mechanisms that take care of consumer grievances without the aid of litigation or formal arbitration.  S.Rep. No. 91-876, at 22-23 (1970) (emphasis added). As the Fifth Circuit concluded, 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. Walton, 298 F.3d at 476. In McMahon, the Supreme Court upheld binding arbitration even though the Securities Exchange Act of 1934's legislative history implied that Congress intended to adopt the Wilko attitude that arbitration is an inadequate forum in which to enforce statutory claims. McMahon, 482 U.S. at 238, 107 S.Ct. at 2343. Any congressional intent to prohibit arbitration in the MMWA's legislative history is considerably less clear than the legislative history of the Securities Exchange Act of 1934, which the Supreme Court held did not prohibit binding arbitration in McMahon. In light of this ambiguity, the Davises fail to carry their burden of showing a clear congressional intent to prohibit binding arbitration of MMWA claims. Thus, given the absence of any meaningful legislative history barring binding arbitration, coupled with the unquestionable federal policy favoring arbitration, we conclude that Congress did not express a clear intent in the MMWA's legislative history to bar binding arbitration agreements in written warranties. 25
26 The last McMahon factor requires us to examine the purposes of the MMWA to determine whether the MMWA and the FAA conflict. See McMahon, 482 U.S. at 226-27, 107 S.Ct. at 2337-38. The MMWA expressly states three purposes: 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). These purposes are not in conflict with the FAA. In fact, the Supreme Court has repeatedly enforced arbitration of statutory claims where the underlying purpose of the statutes is to protect and inform consumers. See, e.g., Basic Inc. v. Levinson, 485 U.S. 224, 234, 108 S.Ct. 978, 985, 99 L.Ed.2d 194 (1988) (stating that a fundamental purpose of the Securities Acts is the disclosure of information to potential investors); Rodriguez de Quijas, 490 U.S. at 485-86, 109 S.Ct. at 1922 (holding that parties may arbitrate Securities Act of 1933 claims); McMahon, 482 U.S. at 242, 107 S.Ct. at 2345 (holding that parties may arbitrate Securities Exchange Act of 1934 claims). [E]ven claims arising under a statute designed to further important social policies may be arbitrated because so long as the prospective litigant effectively may vindicate [his or her] statutory cause of action in the arbitral forum, the statute serves its function. Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 90, 121 S.Ct. 513, 521, 148 L.Ed.2d 373 (2000) (citations omitted) (holding that parties may arbitrate Truth in Lending Act claims). Consumers can adequately vindicate their rights arising under the MMWA and written warranties in an arbitral forum. See Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 280, 115 S.Ct. 834, 842, 130 L.Ed.2d 753 (1995) (Congress, when enacting [the FAA], had the needs of consumers ... in mind.). Thus, we conclude that the MMWA's consumer protection goals do not conflict with the FAA. 27 The MMWA's legislative history also indicates that Congress was concerned with addressing the unequal bargaining power between warrantors and consumers with the enactment of the MMWA, thus creating another possible purpose. 5 Unequal bargaining power alone, however, is not a sufficient reason to never enforce an arbitration agreement of a statutory claim. Gilmer, 500 U.S. at 33, 111 S.Ct. at 1655 (stating that [m]ere inequality in bargaining power, however, is not a sufficient reason to hold that arbitration agreements are never enforceable...). Inequality in bargaining power is a procedural question that courts should analyze on a case by case basis. Id.; see also McMahon, 482 U.S. at 230-31, 107 S.Ct. at 2339-40. Thus, unequal bargaining power, like the three declared purposes of the MMWA, does not create such a conflict with the FAA so as to prohibit binding arbitration of MMWA claims.