Court Opinion

ID: 3060026
Source: CourtListenerOpinion
Date Created: 2015-10-14 00:37:55.463365+00
Date Added: 2024-06-11T07:38:16.647398
License: Public Domain

[DO NOT PUBLISH]

                        IN THE UNITED STATES COURT OF APPEALS

                               FOR THE ELEVENTH CIRCUIT           FILED
                                ________________________ U.S. COURT OF APPEALS
                                                                 ELEVENTH CIRCUIT
                                       No. 10-10869                 JULY 11, 2011
                                                                     JOHN LEY
                                 ________________________              CLERK

                             D.C. Docket No. 1:09-cv-21765-MGC

NATIONAL AUTO LENDERS, INC.,
a Florida corporation,

lllllllllllllllllllll                                          Plaintiff - Appellee,

    versus

SYSLOCATE, INC.,
a Delaware corporation,
DRIVEOK, INC.,
a California corporation,
PROCON, INC.,
a Tennessee corporation,
individually and as successor in interest
to Syslocate, Inc., and DriveOK, Inc.,

lllllllllllllllllllll                                          Defendants - Appellants.
                                ________________________

                          Appeal from the United States District Court
                              for the Southern District of Florida
                                ________________________

                                        (July 11, 2011)
Before BARKETT and WILSON, Circuit Judges, and WALTER,* District Judge.

PER CURIAM:

       SysLOCATE, Inc., DriveOK, Inc., and Procon, Inc. (together,

“Defendants”), appeal the district court’s denial of their motion to dismiss or to

transfer venue, stay proceedings, and compel mediation and arbitration. We

affirm.

       SysLOCATE sold 2,450 GPS1 units to National Auto Lenders, Inc.

(“National”),2 which were installed in cars on which National held liens so that

National could track the cars’ locations through SysLOCATE’s website. National

alleged that the units were defective and then began settlement negotiations with

SysLOCATE. Negotiations stalled, and thereafter SysLOCATE included on its

website end-user licence-agreements (“EULAs”) that National employees had to

“click through” and “accept” before using the SysLOCATE website to track the

working GPS units. These EULAs contained forum-selection and arbitration

clauses. When SysLOCATE posted the first EULA in 2008, National executives

       *
        Honorable Donald E. Walter, United States District Judge for the Western District of
Louisiana, sitting by designation.
       1
         “GPS” is the common term and abbreviation for a “global positioning system.” GPS is
a technology used to remotely determine the location of a given object using a sensor that is
tracked by satellites.
       2
        SysLOCATE partnered with DrikeOK to sell the units, but for convenience, and because
Procon ultimately acquired both SysLOCATE and DriveOK, we will refer only to SysLOCATE.

                                               2
instructed their employees not to use the SysLOCATE website and informed

SysLOCATE that only three executives were authorized to bind National to such

an EULA: Asbel Perez, Ozzie Ramos, and Knox North. Nonetheless, after Procon

acquired SysLOCATE and in 2009 posted a second EULA to which National

objected, National employee Ralph Long used the Procon website and clicked on

the “acceptance” button of a third EULA. National executives were not even

aware of this third EULA, but Long’s acceptance of this EULA is the basis on

which Defendants argue that their motion to compel mediation and arbitration

should have been granted.

      The district court found, among other things, that Long’s online acceptance

of the EULA did not bind National, in large part because, before the 2009 EULAs

were posted, National had specifically notified Defendants that only certain

executives were authorized to bind National for legal issues related to the dispute

over the defective GPS units. As part of its reaction to the first EULA, National

sent an email asking SysLOCATE to terminate National’s access to their website:

      This email constitutes a formal notification that an acceptance of the
      EULA by an NAL [National] user or subaccount user is not a valid
      acceptance by National Auto Lenders as no user or subaccount user is
      authorized by NAL to accept the EULA in NAL’s behalf.

Nonetheless, Defendants argue that they reasonably relied on Long’s apparent

authority to bind National and that this reliance was reasonable because, with

                                         3
National’s awareness, Long corresponded with them about the terms of other

related agreements and held himself out as a “manager.”

       We find no error in the district court’s resolution of this case. Even

assuming that Long had apparent authority to enter into some agreements on

National’s behalf as a result of past dealings or his title, the vigilance with which

National guarded against subsequent EULAs affecting its rights in the dispute

over the allegedly defective SysLOCATE GPS units makes reliance on any

employee’s apparent authority regarding that dispute unreasonable. As we have

noted, a party’s reliance on an agent is unreasonable when that party has “been

confronted with circumstances adequate to put him on inquiry as to the legitimacy

of the agent’s authority.” Am. Lease Plans, Inc. v. Silver Sand Co. of Leesburg,

Inc., 637 F.2d 311, 314 (5th Cir. 1981).3 Over the course of settlement

negotiations, National had consistently rejected any new agreements that could be

used as defenses to claims regarding the SysLOCATE GPS units and stated that it

would not accept such an agreement. National had clearly informed Defendants

that only certain executives could bind the company and that communications

about the dispute over the defective units must go through counsel. Defendants

       3
          In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), this
Court adopted as binding precedent all of the decisions of the former Fifth Circuit handed down
prior to the close of business on September 30, 1981.

                                               4
cannot retrospectively alter the terms of a sale by slipping into a website’s EULA

provisions that National has stated it would not accept and that its employees

lacked authority to accept.4

       In sum, we find that National did not agree to arbitrate this dispute, nor to

litigate in any particular forum. Accordingly, we affirm the district court’s order

denying Defendants’ motion to dismiss or transfer venue and compel mediation

and arbitration.

       AFFIRMED.

       4
         Defendants’ alternative claim that National ratified either the second or third EULA
likewise fails. “Before ratification will be implied of an act of an unauthorized agent it must be
made to appear that the principal has been fully informed and that he has approved.”
Frankenmuth Mut. Ins. Co. v. Magaha, 769 So. 2d 1012, 1021 (Fla. 2000) (quoting Ball v. Yates,
29 So. 2d 729, 732 (Fla. 1946)). Here, though, National immediately objected to the second
EULA, and Defendants offer no evidence that National’s executives were aware of the third
EULA until after this litigation began. Thus, the ratification doctrine is inapplicable.

                                                5