E. GRADY JOLLY, Circuit Judge:
Defendant-Appellant Southern Energy Homes, Inc. appeals the district court's denial of its motion to compel arbitration of the Waltons' claim for breach of express written warranty under the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301-12 (1994). For the following reasons, we REVERSE and REMAND.
In January 1999, Plaintiffs-Appellees Thomas and Le'Ellen Walton ("the Waltons") purchased a mobile home manufactured by Defendant-Appellant Southern Energy Homes, Inc. ("Southern Energy") from a retail seller, Rose Mobile Homes ("Rose"). Southern Energy issued the Waltons a one-year manufacturer's warranty against defects in materials and workmanship. This warranty contained an
The Waltons discovered a variety of defects in their mobile home. They requested repairs from both Southern Energy and Rose on numerous occasions, but these repairs never were completed to the Waltons' satisfaction. Consequently, in October 1999, the Waltons revoked their acceptance of the mobile home by letter.
In December 1999, the Waltons filed suit against Southern Energy and Rose
Both Southern Energy and Rose filed motions to compel arbitration of the Waltons' claims. They contended that the arbitration provisions in the warranty and sales contracts and the separate "Binding Arbitration Agreement" signed by Thomas Walton at the time of sale are valid and enforceable under the Federal Arbitration Act (the "FAA") with respect to all of the Waltons' claims. In response, the Waltons argued that the MMWA precludes the enforcement of binding arbitration provisions contained in express written warranties. The Waltons maintained that, because of this statutory prohibition, neither their warranty claims under the MMWA nor their related state law claims are subject to compulsory arbitration. A federal magistrate judge agreed with the Waltons and denied Southern Energy and Rose's motions to compel arbitration with respect to all of the Waltons' claims.
Upon review of the magistrate judge's order, the district court agreed with the magistrate judge's conclusion that the MMWA precludes Southern Energy (the warrantor) from requiring the Waltons to submit their written warranty claims to binding arbitration. Contrary to the magistrate judge's conclusion, however, the district court compelled arbitration of the Waltons' claims that did not arise under the MMWA. Thus, the district court ordered
We review a district court's grant or denial of a motion to compel arbitration de novo. Webb v. Investacorp, Inc., 89 F.3d 252, 257 (5th Cir.1996). We have determined that a two-step inquiry governs the adjudication of motions to compel arbitration under the FAA: "The first step is to determine whether the parties agreed to arbitrate the dispute in question.... The second step is to determine whether legal constraints external to the parties' agreement foreclosed the arbitration of those claims." Id. at 257-58 (internal citations and quotations omitted). Because neither party disputes that the warranty contains a valid arbitration agreement that encompasses the Waltons' breach of express warranty claim, we focus our attention on the second step of the Webb inquiry: whether the MMWA presents a legal constraint that forecloses arbitration of the express warranty claim.
We first consider the background and dictates of the Federal Arbitration Act, and then of the Magnuson-Moss Warranty Act.
The Federal Arbitration Act was enacted in 1924 to "revers[e] centuries of judicial hostility to arbitration agreements by plac[ing] arbitration agreements upon the same footing as other contracts." Shearson/Am. Express Inc. v. McMahon, 482 U.S. 220, 225-26, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987) (quoting Scherk v. Alberto-Culver Co., 417 U.S. 506, 510-11, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974)) (internal citations and quotations omitted, alterations in original). The FAA provides that:
9 U.S.C. § 2 (1994).
There is a "liberal federal policy favoring arbitration," and the Supreme Court has read the FAA to establish a presumption in favor of the enforceability of contractual arbitration agreements. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The presumption of enforceability of arbitration agreements applies equally to "claim[s] founded on statutory rights." McMahon, 482 U.S. at 226, 107 S.Ct. 2332. Only a contrary congressional command can override the dictates of the FAA. Id.
In order to overcome this presumption in favor of arbitration, the party opposing arbitration bears the burden of demonstrating that "Congress intended to preclude a waiver of judicial remedies for the statutory rights at issue." Id. (citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985)). Courts consider three factors in determining whether Congress intended to preclude application
In every case the Supreme Court has considered involving a statutory right that does not explicitly preclude arbitration, it has upheld the application of the FAA. This includes cases falling under the Age Discrimination in Employment Act,
We now turn to the provisions of the Magnuson-Moss Warranty Act ("MMWA"). The MMWA was enacted in 1974 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). In addition to establishing standards governing the content of warranties, the MMWA creates a statutory cause of action for consumers "damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation [imposed by the Act] or [established by] a written warranty, implied warranty, or service contract." Id. § 2310(d)(1).
Before bringing a suit for breach of warranty, the consumer must give persons obligated under the warranty a reasonable opportunity to "cure" their failure to comply with the obligations at issue. Id. § 2310(e). The MMWA also permits warrantors to establish "informal dispute settlement procedures" for breach of written warranty claims, and to require consumers to resort to such procedures before bringing a civil action.
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." Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). "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." Id. at 843 n. 9, 104 S.Ct. 2778.
There is no doubt that Congress has expressed a clear intention in favor of arbitration for contractual claims. See 9 U.S.C. § 2 ("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, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.") We therefore must determine if Congress expressed any contrary intent with respect to such claims arising under the MMWA.
Under McMahon, in order to determine if Congress intended to preclude arbitration of a statutory claim, we consider the statute's text, its legislative history, and its purpose. McMahon, 482 U.S. at 226, 107 S.Ct. 2332. 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 filing 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,
In Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991), the Court held that the Age Discrimination in Employment Act ("ADEA") does not preclude compulsory arbitration of ADEA claims, even though the ADEA allows the EEOC to pursue "`informal methods of conciliation, conference, and persuasion.'" Id. at 29, 111 S.Ct. 1647 (quoting 29 U.S.C. § 626(b)). Therefore the availability of informal methods of settling a dispute plainly does not itself preclude the availability of arbitration. Further, the fact that the MMWA creates a judicial forum for MMWA claims is insufficient evidence of congressional intent to preclude application of the FAA. See McMahon, 482 U.S. at 227, 107 S.Ct. 2332 (finding that a provision of the Securities Exchange Act stating that "[t]he district courts of the United States ... shall have exclusive jurisdiction of violations of this title or the rules and regulations thereunder, and of all suits in equity and actions at law brought to enforce any liability or duty created by this title" did not preclude application of the FAA to claims brought under the statute) (quoting 15 U.S.C. § 78aa); Gilmer, 500 U.S. at 29, 111 S.Ct. 1647 (rejecting the argument that compulsory arbitration under the ADEA is improper because the statute provides claimants with a judicial forum); Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367, 385, 116 S.Ct. 873, 134 L.Ed.2d 6 (1996) ("[A] statute conferring exclusive federal jurisdiction for a certain class of claims does not necessarily require resolution of those claims in a federal court."). In short, the availability of a judicial forum is no basis for precluding arbitration of claims under the MMWA.
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.
We next consider the legislative history of the MMWA. 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
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.
In McMahon, the Court found that language in the legislative history of the Securities Exchange Act of 1934 — language that appears more persuasive than that above — did not evince a congressional intent to bar all pre-dispute agreements to arbitrate Securities Exchange Act claims. McMahon, 482 U.S. at 238, 107 S.Ct. 2332. Specifically, the legislative history stated:
Id. at 236-37, 107 S.Ct. 2332 (quoting H.R.Rep. No. 94-229, at 111 (1975), reprinted in 1975 U.S.C.C.A.N. 179, 342). This legislative history implied a congressional intent to adopt the then-valid holding in Wilko that arbitration is an inadequate forum for the enforcement of Securities Act of 1933 statutory claims.
The legislative history here is not as persuasive as that in McMahon — which was found unpersuasive by the Supreme Court — and consequently we must conclude that the legislative history here does not evidence a congressional intent to preclude arbitration of MMWA claims.
Finally, we examine the purposes of the MMWA, and whether there is an inherent conflict between the MMWA and the FAA. We know that the MMWA was enacted in
We therefore hold that the text, legislative history, and purpose of the MMWA do not evince a congressional intent to bar arbitration of MMWA written warranty claims.
We recognize that some courts have found that the MMWA precludes binding arbitration, and that a number of courts have agreed with us.
Some of those cases also rely on the FTC regulations to determine congressional intent, and note that the regulations state that consumers should have full access to the courts and that informal dispute mechanisms should be non-binding. For example, in Wilson v. Waverlee Homes, Inc., 954 F.Supp. 1530, 1537-39 (M.D.Ala.1997), aff'd, 127 F.3d 40 (11th Cir.1997) (table op.), the court held that the MMWA precludes binding arbitration of MMWA claims. The court relied on: (1) the MMWA's provision of access to a judicial forum; (2) the fact that informal dispute settlement mechanisms are a prerequisite to suit; (3) the FTC regulations which reflect the MMWA's "command" that consumers should have access to the courts; and (4) the history of the FTC regulations which prohibit binding arbitration. Id.; see also Yeomans v. Homes of Legend, Inc., 2001 WL 237313 (M.D.Ala.) (expressly adopting the reasoning and result in Wilson).
We hold that the MMWA does not preclude binding arbitration of claims pursuant to a valid binding arbitration agreement, which the courts must enforce pursuant to the FAA. The Waltons are bound to arbitrate their claims. We REVERSE the judgment of the district court and REMAND for entry of judgment in accordance with this opinion.
REVERSED and REMANDED.
The case before us is, in essence, a classic Chevron case. The text of the MMWA contains a conspicuous and significant ambiguity: the Act can be read to prohibit the use of binding arbitration agreements in written warranties, or it can be read not to address the enforceability of binding arbitration clauses in written warranties, in which case the FAA's presumption of arbitrability would likely be applicable. The FTC — the agency to which Congress entrusted the task of implementing and elaborating the provisions of the MMWA — has interpreted the MMWA to preclude the enforcement of binding arbitration clauses in written warranties governed by the Act. We are bound to defer to the FTC's interpretation of the Act unless (1) Congress has "directly spoken to the precise question at issue" or (2) the FTC's construction of the statute is unreasonable. Chevron U.S.A., Inc. v. Natural Res. Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). While the majority apparently concedes that the text of the Act is ambiguous and that the legislative history is unilluminating, the majority nonetheless concludes that we must reject the FTC's interpretation under the first prong of Chevron because Congress has unambiguously stated that binding arbitration clauses in written warranties governed by the MMWA are enforceable. Because I find no such clear indicia of congressional intent, and because I conclude that the Commission's interpretation of the MMWA is reasonable and entitled to judicial deference,
I. The FTC's Regulatory Construction of § 2310
The text of the MMWA contains no language explicitly indicating whether Congress intended to preclude application of the FAA to breach of written warranty claims brought under the MMWA.
The MMWA expressly authorizes the FTC to "prescribe rules setting forth minimum requirements for any informal dispute settlement procedure which is incorporated into the terms of a written warranty." See 15 U.S.C. § 2310(a)(2) (2000). Pursuant to this congressional delegation of rulemaking authority, the FTC has established detailed regulations governing the "mechanisms" that warrantors can require customers to utilize prior to "exercising rights or seeking remedies created by Title I of the Act." 16 C.F.R. § 703.2(b)(3) (2001).
Id. § 703.5(g). Indeed, the regulations explicitly announce that "[d]ecisions of the Mechanism shall not be legally binding on any person." Id. § 703.5(j).
The FTC interprets these regulatory provisions to preclude the inclusion of binding arbitration agreements in written warranties. The FTC apparently adopts the position that the term "mechanism" is appropriately read broadly, to encompass all non-judicial dispute resolution procedures, including arbitration. See, e.g., 40 Fed. Reg. 60167, 60210 (Dec. 31, 1975) (characterizing binding arbitration as a type of "mechanism[ ] whose decisions would be legally binding"). Under this reading, binding arbitration is precluded by the plain language of the regulations specifying that mechanisms cannot be legally binding on any party. Indeed, in responding to public comments suggesting that warrantors should be permitted to include binding arbitration agreements in written warranties, the FTC explicitly indicated that the rule precluded such arrangements. The Commission clarified that:
Id. While the FTC did clarify that a warrantor and a consumer could agree to submit their dispute to binding arbitration after the mechanism has rendered a decision (thus approving post-dispute binding arbitration agreements), the Commission adhered firmly to its position that inclusion of pre-dispute binding arbitration clauses in a written warranty is impermissible because "reference within the written warranty to any binding, non-judicial remedy is prohibited by the Rule and the Act." Id. at 60211.
As the majority correctly recognizes, we are required to defer to the FTC's construction of the MMWA unless: (1) Congress has directly spoken to the precise question at issue, or (2) the FTC's construction is unreasonable. Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778. The majority reaches only the first of these inquiries, finding that Congress has unambiguously stated that binding arbitration clauses are enforceable in written warranties governed by the MMWA. Because I cannot agree with this conclusion, I address both prongs of the Chevron inquiry in turn.
II. Has Congress Directly Spoken to the Precise Question at Issue?
Despite its acknowledgment that neither the text nor the legislative history of the MMWA clearly indicates whether the "informal dispute settlement procedures" provided for in § 2310 are intended to be the exclusive alternative to litigation available for breach of written warranty claims under the Act, the majority nonetheless finds that Congress has "directly spoken to the precise question at issue." Initially, the majority points to the fact that, fifty years prior to the passage of the MMWA, Congress expressed a general policy favoring arbitration of contractual claims in a different statute. The majority apparently finds that this general policy expressed in the FAA is indicative of Congress's intent in enacting the MMWA.
The Supreme Court has indicated that a reviewing court considering whether Congress has specifically addressed a question under the first prong of Chevron "should not confine itself to examining a particular statutory provision in isolation" but should instead read the words of the statute "in their context and with a view to their place in the overall statutory scheme." F.D.A. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132-33, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000) (quoting Davis v. Michigan Dept. of Treasury, 489 U.S. 803, 809, 109 S.Ct. 1500, 103 L.Ed.2d 891 (1989)). For example, in Brown v. Gardner, 513 U.S. 115, 115 S.Ct. 552, 130
Similarly, the Supreme Court has also acknowledged that a court considering whether Congress has specifically addressed a particular question under the first prong of Chevron may glean Congress's "clear intent" regarding an earlier statute from subsequent statutes addressing the same subject matter. As the Brown & Williamson Court recognized:
529 U.S. at 143 (internal citations and quotations omitted, alterations in original). Based in part on this reasoning, the Brown & Williamson Court concluded that the Food, Drug, and Cosmetic Act did not permit the Food and Drug Administration to regulate tobacco products, because Congress had expressed its intent regarding the appropriate regulation of such products in the six tobacco-specific pieces of legislation it enacted subsequent to the Food, Drug, and Cosmetic Act. See id. at 143-57, 120 S.Ct. 1291.
In the instant case, the majority has not gleaned clear congressional intent from the use of similar words in related statutes, as did the Court in Gardner. Nor has the majority found such clear intent by examining Congress's refinement of a general statute in a subsequent, more specific statute, as did the Brown & Williamson Court. Instead, the majority bases its conclusion that Congress has "directly spoken to the precise question" of how to interpret § 2310 of the MMWA on a general policy expressed in a prior, less specific statute. The Supreme Court has never invoked similar reasoning in applying the first prong of the Chevron inquiry. However, even assuming, arguendo, that this method of statutory construction would be appropriate in some circumstances, it is clearly problematic in the context of the instant case.
As the Supreme Court has consistently recognized, the presumption of arbitrability established by the FAA is not absolute and "may be overridden by a contrary congressional command" in the statute creating the right at issue. Shearson/Am. Express Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987); see also Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). The question in the instant case is whether the informal dispute settlement mechanism provisions in § 2310 of the MMWA express such a contrary congressional command. The
The majority further argues that Congress could not possibly have intended for § 2310's provisions regarding "informal dispute settlement procedures" to govern arbitration proceedings because "binding arbitration is not normally thought of as an informal procedure." Unlike the majority, I am extremely hesitant to conclude that Congress has directly addressed an apparent statutory ambiguity based on a judicial assumption about what a term "normally" means. In addition, even assuming the majority's understanding of the generally accepted meaning of "informal procedures" was persuasive indicia of Congress's intent in enacting the MMWA, it is not at all clear that the majority's conclusion that arbitration "is not normally thought of as an informal procedure" accurately reflects how "arbitration" was perceived at the time of the MMWA's enactment in 1974. As numerous commentators have recognized, the formality of arbitration proceedings has increased notably in the latter half of the twentieth century, particularly in the period since the Supreme Court "revitalized" the FAA by clarifying its applicability to statutory claims in the late 1980s. See, e.g., Edward Brunet, Replacing Folklore Arbitration with a Contract Model of Arbitration, 74 Tul. L. Rev. 39, 42-47 (1990) (describing the shift from the "folklore arbitrations" that were common in the early part of the twentieth century, wherein "informal procedures dominated," there was "little or no discovery" and "[e]vidence rules were inapplicable" to modern arbitrations which "resemble litigation" in the sense that there can be "routine discovery, motion practice, application of substantive legal rules, [and] written discursive awards with findings of fact and conclusions of law"); G. Richard Shell, ERISA and Other Federal Employment Statutes: When is Commercial Arbitration an "Adequate Substitute" for the Courts?, 68 Tex. L. Rev. 509, 534 (1990) ("Historically, commercial and labor arbitration have shared a basically informal approach to the actual fact-finding and adjudication process.... In response to recent Supreme Court decisions encouraging the use of commercial arbitration, however, and as part of a general effort to ensure that arbitration procedures adequately protect substantive rights, commercial arbitration institutions have begun to reform their procedures and have added considerable formality to their proceedings."); cf. Bernhardt v. Polygraphic Co., 350 U.S. 198, 203, 76 S.Ct. 273, 100 L.Ed. 199 (1956) (describing commercial arbitration proceedings in 1956 and concluding that "[a]rbitrators do not have the benefit of judicial instruction on the law; they need not give their reasons for their results; the record of their proceedings is not as complete as it is in a court trial; and judicial review of an award is more limited than judicial review of a trial"). Moreover, even today, arbitration undoubtedly constitutes a more "informal" procedure than litigation. Thus, to categorize arbitration as "formal" or "informal" largely begs the question of the appropriate basis of comparison. Under these circumstances, even if the majority is correct that most people would characterize arbitration as a "formal" procedure at this point in time, this perception hardly provides conclusive evidence that the 1974 Congress did not intend to address arbitration
Neither the text of § 2310 nor the statutory context of this provision conclusively indicates whether § 2310 applies to arbitration proceedings (i.e., whether § 2310-governed "informal dispute settlement procedures" are intended to be the exclusive alternative to litigation under the Act). While the legislative history contains some indication that Congress did intend for § 2310 procedures to be the exclusive non-judicial forum available under the Act,
Because I conclude that Congress has not directly spoken to the question we face today, I find it is necessary to reach the second prong of the Chevron inquiry — namely, whether the Commission's interpretation of § 2310 is based on a permissible construction of the statute.
III. Is the FTC's Interpretation of the MMWA Unreasonable?
Because Congress has "delegated authority to the agency generally to make rules carrying the force of law," United States v. Mead Corp., 533 U.S. 218, 121 S.Ct. 2164, 2171, 150 L.Ed.2d 292 (2001), we are required to defer to the Commission's construction of the statute unless that interpretation is unreasonable. Chevron, 467 U.S. at 843, 104 S.Ct. 2778.
While the FTC's interpretive regulations do suggest that the Commission's construction of the statute was partially based on its reading of the statute's jurisdictional provision, the materials accompanying the FTC's promulgation of its legislative regulations (the appropriate focus of our Chevron inquiry)
The Commission's second expressed motive for precluding binding arbitration agreements in written warranties is its concern that such binding arbitration agreements inadequately protect consumers. As a general rule, this court is obliged to defer to the FTC's expertise regarding the most appropriate way to effect the MMWA's consumer protection goals. As the Supreme Court noted in Chevron, "the principle of deference to administrative interpretations has been consistently followed by this Court whenever a decision as to the meaning or reach of a statute has involved reconciling conflicting policies, and a full understanding of the force of the statutory policy in the given situation has depended upon more than ordinary knowledge respecting the matters subjected to agency regulations." 467 U.S. at 844, 104 S.Ct. 2778. However, such deference might be inappropriate if the FTC's concerns about the impact of binding arbitration on consumers were attributable to the Commission's reliance on the Supreme Court's expressed hostility towards arbitration in now-abandoned cases such as Wilko.
This regulatory review statement by the FTC confirms that, even in light of the
While the majority purports not to reach the second prong of Chevron, see majority opinion at note 14, the majority espouses an additional argument against the Commission's construction of § 2310 that appears to be more directly relevant to the inquiry under the second Chevron prong (i.e., whether the Commission's interpretation of the MMWA is reasonable) than under the first Chevron prong. Specifically, the majority contends that the agency's construction of § 2310 is unreasonable because it is inconsistent with the Supreme Court's opinion in Gilmer. In Gilmer, the Court considered whether an employee's claim under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et seq. (1994), should be submitted to compulsory arbitration pursuant to an arbitration agreement in the employee's securities registration application. The employee argued that Congress intended to preclude application of the FAA to claims under the ADEA, suggesting that under the third prong of the McMahon test, there is an "inherent conflict" between arbitration and the ADEA's underlying purpose. Gilmer, 500 U.S. at 26-27, 111 S.Ct. 1647. The employee relied in part upon an ADEA provision requiring the EEOC to "promptly seek to eliminate any alleged unlawful practice by informal methods of conciliation, conference, and persuasion" upon receipt of a charge of discrimination. 29 U.S.C. § 626(d) (1994). The employee apparently argued, inter alia, that this provision signaled Congress's intent to have the EEOC involved in any judicial or non-judicial resolution of statutory claims, thus precluding enforcement of a binding arbitration provision that would resolve disputes without EEOC involvement because this alternative would "undermine the role of the EEOC." Gilmer, 500 U.S. at 28, 111 S.Ct. 1647. The Court rejected this argument, concluding that "nothing in the ADEA indicates that Congress intended
The majority reads Gilmer to hold, as a broad proposition, that express provision in a statute for out-of-court dispute resolution does not preclude application of the FAA. See also, e.g., Cunningham v. Fleetwood Homes of Georgia, Inc., 253 F.3d 611, 619-20 (11th Cir.2001); Am. Homestar, 50 S.W.3d at 487; Ard, 772 So.2d at 1135 (explicitly adopting Justice See's dissent in Lee, 732 So.2d at 1012). However, I find the Gilmer Court's discussion of the EEOC's participation in "informal methods of conciliation, conference, and persuasion" to be too far afield from the facts of the instant case to be dispositive.
Initially, it merits notice that the position advanced by the Waltons in the instant case is materially different from the position advanced by the employee in Gilmer. The Waltons ask this court to defer to an administrative agency's regulatory interpretation that Congress intended for a statute to preclude binding arbitration, not to read a prohibition of binding arbitration into a statute and its regulations based on concerns about impermissibly diminishing the role of the agency. Moreover, the language of the statutory provision at issue in Gilmer is materially different from the language in the MMWA at issue in this case. The ADEA's admonishment that the EEOC should attempt to engage in "conciliation, conference, and persuasion" with the employer upon receipt of an employment discrimination charge cannot be read to speak to the availability of binding arbitration in the same way as a statutory provision that, by its terms, addresses "any informal dispute settlement procedure" provided for in a written warranty. Indeed, it is clear that Congress did not attribute the same meaning to the two phrases. Unlike the MMWA, the ADEA contains no statutory language instructing the regulatory agency to promulgate procedures and regulations governing "conciliation, conference, and persuasion" under the ADEA. Moreover, the EEOC regulations contain no detailed alternative dispute resolution procedures akin to those contained in the FTC's MMWA regulations, suggesting that the EEOC did not read the "conciliation, conference, and persuasion" language in the ADEA to constitute a congressional delegation of authority to regulate alternative dispute resolution mechanisms under the Act. Under these circumstances, the FTC's construction of the MMWA cannot be deemed "unreasonable" based on a perceived inconsistency with the Court's reasoning in Gilmer. Gilmer is simply inapposite.
As none of the arguments advanced by Southern Energy or the majority convincingly demonstrates that the FTC's construction of § 2310 is unreasonable, this court is required to defer to the FTC's interpretation of the statute. Moreover, there are a number of compelling independent reasons why the FTC regulations at issue in the instant case are entitled to particular deference from this court.
Initially, it merits notice that the FTC's legislative regulations constitute a contemporaneous regulatory interpretation of the MMWA. An administrative interpretation "has peculiar weight when it involves a contemporaneous construction of a statute by the [persons] charged with the responsibility of setting its machinery in motion, of making the parts work efficiently and smoothly while they are yet untried and new." Zenith Radio Corp. v. United States, 437 U.S. 443, 450, 98 S.Ct. 2441, 57
Similarly, this court should accord particular deference to the FTC's regulatory interpretation of the MMWA because the regulations represent a longstanding, consistent interpretation of the statute. While agency interpretations that are revised over time are certainly entitled to Chevron deference, see Rust v. Sullivan, 500 U.S. 173, 186, 111 S.Ct. 1759, 114 L.Ed.2d 233 (1991), longstanding and consistent agency interpretations carry special weight. See NLRB v. Bell Aerospace Co. Div. Textron Inc., 416 U.S. 267, 274-75, 94 S.Ct. 1757, 40 L.Ed.2d 134 (1974) ("[A] court may accord great weight to the longstanding interpretation placed on a statute by an agency charged with its administration."); see also Smiley, 517 U.S. at 740, 116 S.Ct. 1730 (noting that, while antiquity is not a condition of validity under the second prong of Chevron, "agency interpretations that are of long standing come before us with a certain credential of reasonableness, since it is rare that error would long persist"). Such a "credential of reasonableness" appears to be particularly warranted in the instant case, where the agency has recently reconsidered and reaffirmed its longstanding, consistent interpretation of the statute through a notice-and-comment regulatory review proceeding.
Finally, while the legislative history of the MMWA does not contain any specific discussion of the availability of arbitration,
S. Rep. No. 93-151, at 2-3 (1973) (emphasis added). This passage suggests that Congress intended for the MMWA to authorize only the specific remedial mechanisms mentioned in the Act. This language also implies that litigation, not arbitration, is the "other avenue[ ] of redress" available to the consumer if the warrantor has not established an informal dispute settlement mechanism or if the consumer is unsatisfied with the results of that proceeding.
The same conclusion is suggested in the report's subsequent, more detailed analysis of the MMWA's remedial provisions. This portion of the report states: "[Section 2310] spells out the remedies available to the purchaser of consumer products. A purchaser can utilize informal dispute settlement procedures established by suppliers or, having afforded a supplier a reasonable opportunity to cure, may resort to formal adversary proceedings with reasonable attorney's fees available if successful in the litigation." Id. at 22-23. This passage suggests that litigation (not arbitration) is the "formal adversary proceeding" contemplated by the Act for a consumer who is dissatisfied with the warrantor's attempt to cure or with any informal dispute settlement procedure that the warrantor has established.
Language in the Conference Committee report provides further confirmation that Congress intended § 2310-compliant procedures to be the exclusive method of non-judicial dispute resolution available under the Act. The Conference Committee report states:
S. Conf. Rep. No. 93-1408 (1974), reprinted in 1974 U.S.C.C.A.N. 7755, 7758 (emphasis added). This passage is enlightening for two reasons. First, it equates the term "informal dispute settlement procedure" as used in the Act with a more general definition (i.e., "internal or other private dispute settlement procedure"), thus suggesting that Congress intended for the term "informal dispute settlement procedure" to be read broadly. In addition, by specifically indicating that any procedure that does not comply with the statutory requirement for consumer or governmental participation is "contrary to the intent of the legislation," this passage
These passages from the Conference Committee report and the Senate report reinforce the Commission's interpretation that Congress intended for § 2310 (and, thus, the FTC's implementing regulations) to govern all non-judicial forms of dispute resolution included in the terms of written warranties. Thus, while the legislative history of the MMWA may not be sufficient by itself to establish Congress's intent to preclude application of the FAA to claims for breach of written warranty under the MMWA, these materials provide added support for the "reasonableness" of the Commission's interpretation.
Accordingly, because I find that Congress has not "directly spoken to the precise question" whether binding arbitration clauses in written warranties governed by the MMWA are enforceable, and because the FTC's construction of the statute is eminently reasonable, I would defer to the Commission's expertise and affirm the district court's judgment refusing to compel arbitration of the Waltons' written warranty claims. I dissent.
In contrast, the FTC's interpretive rules are not necessarily subject to Chevron deference. See, e.g., Martin v. Occupational Safety & Health Review Comm'n, 499 U.S. 144, 157, 111 S.Ct. 1171, 113 L.Ed.2d 117 (1991) (noting that interpretive rules and enforcement guidelines are "not entitled to the same deference as norms that derive from the exercise of the Secretary's delegated lawmaking powers"). While the FTC's rules, unlike many interpretive rules, were subject to notice and comment (i.e., the FTC published a notice of the proposed rules in the Federal Register and interested parties were permitted to submit written comments), these interpretations were not subject to the level of public participation mandated by the MMWA's provisions governing the promulgation of regulations. See 15 U.S.C. § 2309 (1994) (noting that to properly prescribe a rule under the MMWA, the Commission must "give interested persons an opportunity for oral presentations of data, views, and arguments, in addition to written submissions"). Moreover, in light of the agency's disclaimer that its interpretive regulations are not intended to have the force of law, see 42 Fed. Reg. 36111, 36112 (July 13, 1977) (noting that the interpretive regulations "are not ... substantive rules and do not have the force or effect of statutory provisions" and that "like industry guides, they are advisory in nature"), it appears that these regulations are not entitled to Chevron deference. See Christensen v. Harris County, 529 U.S. 576, 587, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000) ("Interpretations such as those in opinion letters — like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law — do not warrant Chevron—style deference."). Such interpretive regulations are "entitled to respect," but only to the extent that they "have the power to persuade." Id. at 587, 120 S.Ct. 1655 (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944) (internal quotations omitted)).