# Petition for Writ of Certiorari — Davis v. Southern Energy Homes, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_1071%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2003 - **Citation:** 538 U.S. 945 ## Text eater YS ws Sup > Owurt, U.S. ED (\) 0 2] v - 1 17 JAN 27 2008 cxucenenntemsasmeiiieeieee nn. In The Supreme Court of the Anited States @ v MICHAEL SHANE DAVIS AND HEATHER N. DAVIS, Petitioners, V. SOUTHERN ENERGY HOMES, INC., a corporation, | Respondent. yr v On Petition for a Writ of Certiorari To the United States Court of Appeals For the Eleventh Circuit yr v PETITION FOR WRIT OF CERTIORARI — Vv G. HOUSTON HOWARD II Counsel of Record HOWARD, DUNN, HOWARD & HOWARD P.O. Box 1148 Wetumpka, AL 36092 (334) 567-4356 COCKLE LAW BRIEF PRINTING CO. (800) 225-6964 \ 2) \ OR CALL COLLECT (402) 342-2831 ee QUESTIONS PRESENTED 1. Does the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act (MMWA) prohibit a supplier of a consumer product from creating a binding arbitration procedure at the time of product sale? 2. Is the federal policy in favor of arbitration a sufficient basis for a court to disregard the Federal Trade Commission’s interpretation of the MMWA - expressed in a legislative regulation — as prohibiting binding arbitration provisions in consumer product warranties? TABLE OF CONTENTS QUESTIONS PRESENTED..............0sccrersesssseesorereers TABLE OF AUTHORISES cvsscecsccssvessrsccosacsvevesorsvenes SP EIFEUE IST cpncavinecsnsecsensreesinersecsessnesenennesenss GRFEEI CHIEN ssesevvsnvassvesinsaveasswivincspeonsaceniteuotediienses FE Cae BEF FT IEEE EEE cicencencnnsersnintiqerninivésssssineioinns STATEMENT OF THE CASE...............ccssssssovceeeeeeeees REASONS FOR GRANTING THE WRIT ................. THE. ELEVENTH CIRCUIT ERRED BY HOLDING THAT THE MMWA ALLOWS WARRANTORS TO CREATE BINDING AR- BITRATION PROCEDURES AT THE TIME OF FRA FIE COREE vnsvesectinevisccacsscinarceesarsnone A. The Text: MMWA Dispute Settlement Procedures May Not Be Binding, and Ar- bitration is a Dispute Settlement Proce- 8 4. MMWA dispute settlement proce- cures may not be binding................... Arbitration is a dispute settlement OID ects sidiinsvitccnceadianinaint: If arbitration is not an informal proce- dure, then the MMWA prohibits it ........ The Eleventh Circuit’s opinion renders portions of the MMWA meaningless...... B. Legislative History: Congress Intended for Warranty Procedures to be Non- ee snkunnsoatgatasepliaiaiin alae ili TABLE OF CONTENTS — Continued a Page II]. THE ELEVENTH CIRCUIT ERRED BY INVOKING THE FEDERAL POLICY IN FA- VOR OF ARBITRATION AS BASIS FOR DISREGARDING THE FTC’S INTERPRE- TATION OF THE MMWA......00.0 occ. A. The FTC Regulations............................... B. The Legal Standard .....0.........0.000000000....... The Eleventh Circuit erred by invok- ing the federal policy in favor of arbi- tration as a basis for refusing to enforce FTC regulations..................... The Eleventh Circuit erred by hold- ing that section 700.8 contains the reason that the FTC rejected binding tyes, IORI OSETE Sean ae The Eleventh Circuit erred by refus- ing to defer to the FTC’s definition of “dispute settlement procedure.” ........ The Eleventh Circuit erred by refus- ing to defer to the FTC’s construction of the statutory I The Eleventh Circuit erred by substi- tuting its judgment for that of the FTC about the fairness of consumer REESE oe ann 18 19 20 21 21 22 23 25 iv TABLE OF CONTENTS - Continued . Page Ill. THIS COURT SHOULD DECIDE THE IM- PORTANT QUESTIONS OF WHETHER THE MMWA PROHIBITS WARRANTY PROVI- SIONS REQUIRING BINDING ARBITRATION AND WHETHER THE FEDERAL POLICY FA- VORING ARBITRATION IS A SUFFICIENT BASIS FOR DISREGARDING THE FTC’S INTERPRETATION OF THE MMWA................ 28 eee INT ciexchiicocnscieniopticnbakivncniandidhbnaciausasvienent 30 APPENDIX Opinion of the United States Court of Appeals for Re TS CIN scat henecntcnnenncsrcsareternediicnions App. 1 Memorandum Opinion and Order of the United States District Court for the Middle District of ID sicticieesscsanbiaecinealanacsapelciiaieia wd amneainel App. 25 Eleventh Circuit Order Denying Rehearing......... App. 31 ie ei hthitiensiccaniestcaininnineiinainialacaietiamaelia App. 33 Bip SA ae: Se Se hhc sntcciarvinissenencentcenlicinideiamamecsmbides App. 33 15 U.S.C. § 2BOB .........cceseseee iS cncckensecnppnaiaaiamouammecans App. 37 Be Fee ee sei sa veicscancanenidicstnctecasinciieamentaditiiasaitnenns App. 38 SOF 6 i iccsitititeinscttinhciiviinabiaainait App. 43 ee ie ee vertaechnectahsickdasseeceecaennceateaiableiahied App. 44 BG CF | Pa cen cceesnsesesdeeisnoenenensieinietiniennerseenenien App. 46 Excerpt from Warranty of Southern Energy DIG TI, siciniciencsstancitieseeininierviacesiaumainnicommatiniling App. 51 TABLE OF AUTHORITIES Page CASES Andrews v. Grand Manor, Inc., 1999 U.S. Dist. LEXIS 15429 (S.D. Ala. July 13, 1999), adopted, 1999 U.S. Dist. LEXIS 15464 (S.D. Ala. Sept. 13, BET tenkitentinpiassastnntniasanitiiiaibneiaadbiaiitieica acini eas 29 Atkins v. Rivera, 477 U.S. 154 (1986). ....ccccccccsccoceccecescees... 20 Batterton v. Francis, 432 U.S. 416 (1977) cecccccecccccoccseese... 26 Boyd v. Homes of Legend, Inc., 981 F. Supp. 1423 (M.D. Ala. 1997), rev’d on other grounds, 188 F.3d SE Be iiniriitssnitesdacnnitinid ee 29 Brown v. Gardner, 513 U.S. 115 (1994) ..ccccccccccccoccecccceeeeees, 7 Browne v. Kline Tysons Imports, Inc., 190 F. Supp. SE SIE WD. BD isssicnisicescosnacdanssnnintiinieincce cnsisccnstead 29 Buffalo Forge Co. v. United Steelworkers of Am., SF AN TPF CR PR i ncninsacinnissceditpuciananddiacai kde t esd 6, 18 Chevron, U.S.A., Inc. v. Echazabal, 122 S. Ct. 2045 [Une vtEP ninstiinspsiasniiieesstnnannnounisubiatiaiinansiedadasiaram te. tale. 24 Chevron, U.S.A. v. Natural Res. Def: Council, 467 SRT GME D osikicerievinnitiniceaSspsiincenssadineicsee sts passim Christensen v. Harris County, 529 U.S. 576 (B0GD)...:n0eveves 21 Detroit & Toledo Shore Line Transport. Union v. United Transport. Union, 396 U.S. 142 (1969)............... 6 EEOC v. Waffle House, Inc., 534 U.S. 279 (2002).............. 22 Estate of Cowart v. Nicklos Drilling Co., 505 U.S. PR iantiacteita baie ees ie teeadobibsabGebebnseies 27 FDA v. Brown & Williamson Tobacco Corp., 529 Ce ee Cec citadlecibcliectcani a eh 16 vi ~ TABLE OF AUTHORITIES -— Continued Page Hillsborough County v. Automated Med. Labs, Inc., Ae Rs, He OD inicacedackdnnaseannaleiansantonicnenmeniamanvncinsees 23 Homes of Legend, Inc. v. McCollough, 776 So. 2d FN Si SE shi enstnciichtiehiinennaniniie 8 Howard Johnson Co. v. Hotel Employees, 417 U.S. eR cas inichsqoestavicdinssscsdticsbuehbantuieaseghsnsnteaanaaeabiicniai 6 INS v. Cordoza-Fonseca, 480 U.S. 421 (1987)..............0 4 Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, a Te ee ee Write insincere 7 Mourning v. Family Publ’n Serv., Inc., 411 U.S. 356 TD iwish sinc deacoceueiciainknicionticiiaiabiainedaeniiaapaniaiialla 9, 25 National Cable & Telecomm. Ass’n, Inc. v. Gulf Power Co., 584 U.S. SBT (BOGB).....cecvovcccsccrcescccvseveses 25, 26 National R.R. Passenger Corp. v. Boston & Maine Corp., 503 U.S. 407 (1992)................sscsseeeees 21, 23, 24, 25 National R.R. Passenger Corp. v. Morgan, 122 S. ai: SII SITTIN sbi ctciseesssininirnsenierscnibionieienssagiiniaddeeniiaela’ 4,21 Nationsbank of N.C. v. Variable Annuity Life Ins., Be Py I 8 ITA oiniisesvecnestannncubniindeniigbeiaiinabininddiadahias 24 New Orleans S.S Ass’n v. General Longshore Workers, 626 F.2d 455 (5th Cir. 1980)..................ccseeeeee 5 Norfolk & Western Ry. Ce. v. American Train Dispatchers Ass’n, 499 U.S. 117 (1991)... eee 22 Parkerson v. Smith, 817 So. 2d 529 (Miss. 2002)........ 29, 30 Pitchford v. Oakwood Mobile Homes, Inc., 124 FP. Sapp. Bd OES CW.D. Ver. BODO). ar .cccccsssvcscssscvcessssesccccees 29 Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 Br, Ce CTP icewtbiinsnnichiceslinsdeilitiebbvadshlcminenntatieeaeareetciias ace 22 I a a wh ln vii -~ TABLE OF AUTHORITIES - Continued Page Raesly v. Grand Hous., Inc., 105 F. Supp. 2d 562 Pe nd MINIT iacicalecctsdsdchGliciucbdeninuscsstnieaubiesiiallunnidiicacssctctandate 29 Rhodes v. E & T Investments, Inc., 6 F. Supp. 2d Is SUIUD ecssctincivestnnstihersnicienstacsecsbuiiieenaconeonss 29 Ruckelshaus v. EPA, 463 U.S. 680 (1983)..................6....... 26 Rust v. Sullivan, 500 U.S. 173 (1991)......ccccccccccccccecceecceeees 21 Shearson/Am. Express, Inc. v. McMahon, 482 U.S. Se ATT ihitl nh akc coaceunchiaceetniadisinaintiameccaescceicahes 2, 26, 27 Skidmore v. Swift & Co., 323 U.S. 134 (1944)....ccccccccccce. 21 Southern Energy Homes, Inc. v. Ard, 772 So. 2d Ee ie He iinicivenestnesininsisdsacesensiohicdnscelitietaminnoumceieal 29 Southern Energy Homes, Inc. v. Lee, 732 So. 2d 994 CS Are CC EE nT Se ee 29 Smiley v. Citibank (S.D.), N.A., 517 U.S. 735 (1996)........ 24 Trainmen v. Chicago River & Indiana R.R., 353 A TUN Di dahintleiiinsibibiiciceieiledibabdalian cae ete) i 4 Trans World Airlines, Inc. v. Independent Fed’n of Flight Attendants, 489 U.S. 426 (1988) .........ccccccccccceeee. 18 United States v. Alaska, 503 U.S. 569 (1992).......cccccccecee-. 22 United States v. Gonzales, 520 U.S. 1 (1997) .o.cccccccecccoceee- 7 United States v. Haggar Apparel Co., 526 U.S. 380 RTT esti liddiiesitletcieepaiiiaaibiopiiiinta aaa) 2 20 United States v. Mead Corp., 533 U.S. 218 (2001) ..21, 24, 28 Walton v. Rose Mobile Homes, LLC, 298 F.3d 470 PURSE estrecho 3,6 William E. Arnold & Co. v. Carpenters District Commedl, 627 U.B. 2S (RDFA) on. cccecnccococcossccvecssesscoseresceseees 6 Viii TABLE OF AUTHORITIES - Continued Page Wilson v. Waverlee Homes, Inc., 954 F. Supp. 1530 (M.D. Ala.), aff'd, 127 F.3d 40 (11th Cir. 1997)....20, 28, 29 Wolsey, Ltd. v. Foodmaker, Inc., 144 F.3d 1205 (9th GF Be nstsctesnincseccnnseessicnncensnnensenincnsetenstapibnnnesitiabiorteadia 8 Wood v. Cooper Chevrolet, Inc., 102 F. Supp. 2d SE re Bas. HD ctctentncienannsenensnnenntintncnntanaimmeiinnndies 29 Yellow Transport., Inc. v. Michigan, 123 S. Ct. 371 ITI deienenntderceustennetucetlptaiseababnhdunanganéadiceniehiaantinianinnaumbend 24 Yeomans v. Homes of Legend, Inc., 2001 U.S. Dist. LEXIS 2528 (M.D. Ala. 2001) ..........cccccccccsesorcecccccovecceees 29 Zenith Radio Corp. v. United States, 437 U.S. 443 eli insk ssnsensiniadiecdatensiaiiiicdeaisumaiiatndnnatintahdnieneatntenmieosiniinn 24 STATUTES AND REGULATIONS ey Be IE Gacusescncaiescceiinsseiatinnaieneiinsinnibenihninntin 1, 22, 23 ee ee stitnscinlesnnsccsisicneincinntniandennsnpnnicepesinniaveinniins 1 BE ee OF Se centenacesksnnsestntcccnensensensnrnseiiamnmente passim 40 Fed. Reg. 60168 (1975)..............::cessseeeeeeeeees 20, 23, 25, 29 SE Fe, Fae Be Ce ic trtctccntnnsncictinstiniasiintiiinciaiiaaiauinis 23 GB Fd. Tae, FART CEG T 8 Paicviccescccevevccesssccerteccecsneqnesesees 20, 23 64 Fed. Reg. 19700 (1999)...................sssssesesee 20, 23, 26, 29 Fla. Stat. Ann. § 681.102(17) (2002)............:ccccseseeeeeeeeeeeees 16 Ga. Code Ann. § 10-1-782(8) (2002)..........cc:sscceseeeeeseeeeeees 16 Idaho Code § 48-906(2) (2002) ............:sssssssesrsereseesseseeneeeens 16 Ky. Rev. Stat. Ann. § 367.865 (2000).............:ccccccssessseseseees 16 Me. Rev. Stat. Ann. tit. 10, § 1161(5) (2001)................eee 16 ix TABLE OF AUTHORITIES - Continued Page Minn. Stat. § 225F.665(1)(f) (2001)..........cccccccsccsesesesseeeseees 16 N.J. Rev. Stat. § 56-12-30 (2000) oo....ccccccccecccsececceceesececeeees 16 N.H. Rev. Stat. § 357-D:4(IV) (2002) ........cccccccssssceseesesesees 16 N.Y. Gen. Bus. Law § 198-a(m) (2002)........cccccccccccecceeeeee-.. 16 Pub. Law No. 93-637, 88 Stat. 2183 (1975) ....cccccccccccsececeees 9 Pub. Law No. 96-190, 94 Stat. 17 (1980). ....cccccccccccccsececeee, 15 Pub. Law No. 107-273, 116 Stat. 1758 (2002) .....ccccc.0... 27 EL AES SSNS REE 30 Oe II Wi icleluasintiaibidaaiiibdeschcdacsen rancneitice dc pcs 1, 22 eae Be Stil ansrsstsstinssitshvntoncbeiskeniindaimeneddeacecth eesesosees exe 1 i gE EFL NCR DRED AION CSTE IS 1,4 Para a iaienideosbiedaienindebbdSascedabstusecibtobdedobaacatseels 1,19 SERRE EIR ae ea ee passim a AI inate suscieninulicasasastcncceslseckescsccecse cla. 5 I i lidicidsecasudctissibebchnsiiculéiideneciusecnedkele. 5 pI Glisten 2 Lees 5,6 tein en Vit) Doon 6 I lichens ictbiacacichdernitncaetennincneaarceiecca: 8 TABLE OF AUTHORITIES -— Continued LEGISLATIVE HISTORY Adequacy of Consumer Redress Mechanisms: Joint Hearing Before the Subcomm. on Consumers of the Senate Comm. on Commerce and the Sub- comm. on the Representation of Citizens’ Interests of the Senate Comm. on the Judiciary, 93d Cong. a cckineshcnssdtdliaciciptaditesbiiamtaihedanienseiniiiens 10, 13, 14, ype 8. g | ERRNO EOE ENED Cee 127 Comm. Rec. BESTS (1G71)...5..cscseverecersesscsenessenessecnss Be, Be Ci iinicacebcccneteccscnenescacccsessciserevinys a Ne, SR Sn Coie vvintsetosirccsensecccniensasenevssseis Consumer Controversies Resolution Act: Hearings Before the Subcomm. on Consumer Protection and Finance of the House Comm. on Interstate and Foreign Comm., 95th Cong. (1978)...............0008 Consumer Products Warranties and Improvement Act of 1971: Hearings on S. 986 Before the Con- sumer Subcomm. of the Senate Comm. on Com- al: Te Ge Ce cn tacssnksicvitnsntininiciencstanenniinanes Consumer Product Warranty Act: Hearings on S. 3074 Before the Consumer Subcomm. of the Sen- ate Comm. on Commerce, 91st Cong. (1970) ........... Consumer Warranty Protection — 1973: Hearings on H.R. 20 and H.R. 5021 Before the Subcomm. on Commerce and Finance of the House Comm. on Interstate and Foreign Commerce, 93d Cong. Sa ihiviiehenacentiiaensiblanbsaaldbsiiieisatdiesiisidasieetadsaialiapiscebisieaaii se Page 15, 18 ae ee ee Se ee ee eee xi TABLE OF AUTHORITIES - Continued Page Consumer Warranty Protection: Hearings on H.R. 6313, H.R. 6314, H.R. 261, H.R 4809, H.R. 5307, H.R. 10673 (and Similar and Identical Bills) Before the Subcomm. on Commerce and Finance of the House Comm. on Interstate and Foreign Commerce, 92d Cong. (1971)......ccccccccccseseccecceeceessec., 10, 12 Fairness and Voluntary Arbitration Act: Hearings on H.R. 534 Before the Subcomm. on Commercial and Administrative Law of the House Comm. of the Judiciary, 106th Cong. (2000) ........cccccccseosececeeeceee... 27 H.R. Rep. No. 93-1107 (1974), reprinted in 1974 A, FD x vesissvercesnniessansesvvnistbacsseeneescsssen 12, 13 H.R. Rep. 96-492, pt. 1 (1979), reprinted in 1980 eT INIIG: TP Siiinn sobniciiiticnsheaiisceesbdin tice as 6, 16 S. 3074, 91st Cong., 115 Cong. Rec. 31483 (1969)......... 9,11 S. Conf. Rep. No. 93-1408 (1974), reprinted in 1974 PAPAS SARAN, OUD cwinsxsvursssnscovraxensirasenersnvreesseansoesesess, 9,17 S. Rep. No. 93-151 (1973)..........cccccccssssessocescoseceeceeeesse, 12, 14 S. Rep. No. 95-210 (1977).............:0:ececcsecescesesesvoveseseoesees...., 15 S. Rep. No. 107-266 (2002)............:s0csececcsececessaceseseseses. 27, 29 Warranties and Guaranties: Hearings Before the Subcomm. on Commerce and Finance of the House Comm. on Interstate and Foreign Com- merce, 91st Cong. (1970) ..............cccccccscsssossosesecooees,. 10, 11 OTHER AUTHORITIES American Arbitration Association, National Center for Dispute Settlement, Consumer Arbitration ET A ia cetsccnnstietcsssnorsitnrdilestbtsslends asiesieseasensen: Locak. 5 TABLE OF AUTHORITIES - Continued Page American Arbitration Association, Supplementary Procedures for the Resolution of Consumer Re- Sead, Ta TE. 1, BOG? pave sie censsstvnsessesevneperinivnentiee 8 Merton C. Bernstein, Private Dispute Settlement: Cases and Materials on Arbitration (1968) ............... 5, 18 Alfred W. Blumrosen, Labor Arbitration, EEOC Conciliation, and Discrimination in Employment, 24 The Arbitration Journal 88 (1969).............:::cecceeeeeeeee 5 Robert Coulson, Business Arbitration - What You PE Be EE iiss insinadimemasevinieoaineeeine 7 Frank Elkouri & Edna Asper Elkouri, How Arbitra- SE Se Ec hircinncsnideniicnsicancacsmnidapeiaaiialicinaiancomi 5 NAFTA, Institutional Arrangement and Dispute Settlement Procedures, chapt. 20, http://www.world tradelaw.net/nafta/chap-20.pdf 0.0.0.0... ccccecceceeeereeeeeeeees 5 National Consumer Disputes Advocacy Committee, American Arbitration Association, Consumer Due PORN FEE Ca evietcnstvnnsstisnicisscnsieceisiinhamenaetite 28 National Institute for Consumer Justice, Redress of Consumer Grievances (19738)..........csscccseceeeceseceeeeeeees 10, 13 National Institute for Consumer Justice, Staff EE i iiciciiiniiceratcitecnstentcsndieminnecntiiadaail 5, 7, 8, 14 Richard Nixon, Pub. Papers (1971) ..............sscccssesseessssssees 11 Jack C. Plano & Roy Olton, The International FRG TCG (IID oviin sev ensessisncivnrecnienessiainivsncenent 4 Maurice Rosenberg & Myra Schubin, Trial by Lawyer: Compulsory Arbitration of Small Claims in Pennsylvania, 74 Harv. L. Rev. 448 (1961)............ 8,14 ‘ Se ata Bae bn —— xiii TABLE OF AUTHORITIES -— Continued Page Katharine Side, A Dictionary of Arbitration and Its Terms — Labor-Commercial-International: A Con- cise Encyclopedia of Peaceful Dispute Settlement 5 Rennes LE SENSI de Fo Ae Err 4 WTO, Understanding on Rules and Procedures Governing the Settlement of Disputes, http://www. worldtradelaw.net/uragreements/dsu.pdf..............cceccc0000. 5 1 OPINIONS BELOW The opinion of the Eleventh Circuit of Appeals is reported at Davis v. Southern Energy Homes, Inc., 305 F.3d 1268 (11th Cir. 2002), and appears in the Appendix at 1-24. The order denying rehearing appears in the Appen- dix at 31. The district court’s opinion is not published and appears in the Appendix at 25-30. JURISDICTION The district court had jurisdiction under 15 U.S.C. § 2310(d). The Eleventh Circuit had jurisdiction of the appeal under 9 U.S.C. § 16. The opinion of the Eleventh Circuit was issued September 19, 2002, App. at 1, and the petitioners timely filed an Application for Rehearing on October 3, 2002. The court denied rehearing on November 14, 2002. App. at 31. This court has jurisdiction under 28 U.S.C. § 1254(1). STATUTES INVOLVED 9 U.S.C. § 2, Federal Arbitration Act. 15 U.S.C §§ 2302, 2309, 2310, Magnuson-Moss War- ranty-Federal Trade Commission Improvement Act. 16 C.F.R. § 700.8, Interpretations, Warrantor’s Deci- sion as Final. 16 C.F.R. §§ 703.1, 703.5, Informal Dispute Settlement Procedures. STATEMENT OF THE CASE The Davises filed this action in the Circuit Court of Lowndes County, Alabama, to recover for defects in a manufactured home constructed by Southern. They alleged state-law claims for fraud, negligence, and wan- tonness, together with state-law and MMWA claims for breach of warranty. They further alleged that Southern’s warranty con- tained an arbitration provision and that they had been 2 required to execute arbitration provisions as part of product purchase. They alleged that these provisions violated the MMWA and its regulations and “create[d] a cause of action in favor of the plaintiffs under sections 2302 and 2310(d)(1) of title 15.” Southern removed the action to the United States District Court for the Middle District of Alabama, where it filed a Motion to Compel Arbitration based on the arbitration provision in its warranty. App. at 26-27, 51. The district court denied Southern’s motion on the ground that the MMWA precludes arbitration of written warranty claims. App. at 29-30. Southern appealed, and the Eleventh Circuit reversed, holding that “the MMWA permits the enforcement of valid binding arbitration agreements within written warranties.” App. at 6. The court further held that “[iJn light of the Supreme Court’s acknowledgement and continual enforcement of the strong federal policy toward arbitration ... we conclude that the FTC’s interpretation of the MMWA is unreasonable, and we decline to defer to the FTC regulations of the MMWA regarding binding arbitration.” App. at 23. The plaintiffs filed an Application for Rehearing, which the court denied without further opinion. App. at 31. REASONS FOR GRANTING THE WRIT I. THE ELEVENTH CIRCUIT ERRED BY HOLD- ING THAT THE MMWA ALLOWS WARRAN- TORS TO CREATE BINDING ARBITRATION PROCEDURES AT THE TIME OF PRODUCT SALE. Summary. The test for determining whether a federal statute preserves a judicial forum is stated in Shear- son/American Express, Inc. v. McMahon, 482 U.S. 220, 227 (1987). “If Congress did intend to limit or prohibit waiver of a judicial forum for a particular claim, such an intent ‘will be deducible from [the statute’s] text or legisla- tive history, ... or from an inherent conflict between arbitration and the statute’s underlying purposes.” 3 Although the Eleventh Circuit correctly cited this test, it failed tn give the statutory term, dispute settlement proce- dure, its generally accepted meaning, and it ignored relevant legislative history. A. The Text: MMWA Dispute Settlement Pro- cedures May Not Be Binding, and Arbitra- tion is a Dispute Settlement Procedure. 1. MMWA dispute settlement procedures may not be binding. All courts that have considered the issue, includ- ing those that permit binding arbitration, have deter- mined that MMWA dispute settlement procedures may not be binding. See, e.g., Walton v. Rose Mobile Homes, LLC, 298 F.3d 470, 476 (5th Cir. 2002). The Eleventh Circuit likewise recognized that “any informal dispute settlement procedure must be non-binding.” App. at 14. These holdings are consistent with language of the Act. First, on a procedural level, the Act states that “the consumer may not commence a civil action (other than a class action) under subsection (d) of this section unless he initially resorts to such procedure.” 15 U.S.C. § 2310(a)(3). This implies that the dispute settlement procedure may not be “final” or “binding.” If it were, the words requiring only that the consumer “initially resort” to the procedure would be meaningless. Second, on an administrative level, the Act states that the prohibition of suit applies only if the warrantor’s settlement procedure “meets the requirements of the Commission rules.” 15 U.S.C. § 2310(a)(3). Since the Commission’s rules prohibit binding procedures, 16 C.FR. § 703.54), this language prohibits a warrantor from creating a binding procedure. Third, on an evidentiary level, the Act states, “In 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 evi- dence.” 15 U.S.C. § 2310(a)(3). This implies that the decision will have an evidentiary, but not binding, effect. 4 And finally, on a jurisdictional level, section 2310(d) states, “Subject to subsections (a)(3) [informal dispute settlement procedures] and (e) [class actions], a consumer who is damaged ... may bring suit for damages and other legal and equitable relief.” This, of course, implies that the dispute settlement procedure may not be binding; if it were, no right to suit would exist following utilization of the procedure. 2. Arbitration is a dispute settlement procedure. The Davises argued that “Congress used the terms ‘dispute settlement procedures’ and ‘dispute settlement mecha- nisms’ only as generic terms, and thereby included binding arbitration as a type of alternative dispute resolution procedure.” App. at 4-5. Without defining arbitration or dispute settlement procedure, the court rejected this argument, holding that arbitration “is of a different nature.” App. at 15. “In the absence of an indication to the contrary, words in a statute are assumed to bear their ‘ordinary, contempo- rary, common meaning.” National R.R. Passenger Corp. v. Morgan, 122 S.Ct. 2061, 2070 n.5 (2002); see INS v. Cordoza-Fonseca, 480-U.S. 421, 431 (1987). A statute may establish an arbitration procedure without using the word “arbitration.” See Trainmen v. Chicago River & Indiana R.R., 353 U.S. 30 (1957). The MMWA does not define the terms “dispute settlement procedure{s],” 15 U.S.C. § 2310(a)(4), “informal dispute settlement procedure[s],” 15 U.S.C. §§ 2302(a)(8), 2310(aX2) & 2310(a)\(3), and “informal dispute settlement mechanisms.” 15 U.S.C. § 2310(a)(1). Thus, we must determine their “ordinary, contemporary, common meaning.” According to references published before enactment of the MMWA, dispute settlement procedure is a generic term that includes “all the possible means available to parties or governments for the peaceful settlement of a contro- versy.” Katharine Side, A Dictionary of Arbitration and Its Terms—Labor-Commercial-International: A Concise Ency- clopedia of Peaceful Dispute Settlement 73 (1970); see Jack C. Plano & Roy Olton, The International Relations 5 Dictionary 303 (1969) (defining United Nations dispute settlement procedures). “The dispute settlement mechanism . consists of a wide variety of tribunals from informal mediation to more formal conciliation, to arbitration and administrative action and finally, judicial proceedings.” Alfred W. Blumrosen, Labor Arbitration, EEOC Concilia- tion, and Discrimination in Employment, 24 The Arbitra- tion Journal 88, 90 (1969). “Arbitration is a dispute-settlement procedure.” New Orleans S.S Ass’n v. General Longshore Workers, 626 F.2d 455, 468 (Sth Cir. 1980). Generally, it is the last or final step in a series of dispute settlement procedures. See Merton C. Bernstein, Private Dispute Settlement: Cases and Materials on Arbitration 2 (1968); Frank Elkouri & Edna Asper Elkouri, How Arbitration Works 106 (3d 1973) (“Arbitration generally is the last step or terminal point of dispute settlement under union contracts.”). The American Arbitration Association created a special division for consumer arbitrations, and it named that division the “National Center for Dispute Settlement.” See American Arbitration Association, National Center for Dispute Settlement, Consumer Arbitration Rules (1971) (reprinted in Nationai Institute for Consumer Justice, Staff Studies at 174-77 (1973) [hereinafter, NICJ, Staff Studies]). This usage is reflected in statutes, treaties, and judicial decisions. For instance, the Omnibus Trade and Competitiveness Act of 1988 defined one of the United States’ principal trade objectives as “to provide for more effective and expeditious dispute settlement mechanisms and procedures.” 19 U.S.C. § 2901(b)(1). Both the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) contain disputes settlement procedures that begin with consultation and end with arbitration. See NAFTA, Institutional Arrangement and Dispute Settlement Procedures, chapt. 20, http://www. worldtradelaw.net/nafta/chap-20.pdf; 19 U.S.C. § 3311 (approving NAFTA); WTO, Understanding on Rules and Procedures Governing the Settlement of Disputes, http:// www. worldtradelaw.net/uragreements/dsu.pdf; 19 U.S.C. 6 § 3511(d)(16) (approving WTO dispute settlement proce- dures); 19 U.S.C. § 3533 (referring to WTO process as “dispute settlement panels and procedures”). Decisions of this Court, before enactment of the MMWA, likewise used the terms dispute settlement proce- dure and dispute settlement mechanism as generic terms that included arbitration. In Detroit & Toledo Shore Line Transport. Union v. United Transport. Union, 396 U.S. 142, 149-50 (1969), this Court said, “[The Railway Labor] Act established rather elaborate machinery for negotia- tion, mediation, voluntary arbitration, and conciliation. .. . There are three status quo provisions of the Act, each covering a different stage of the major dispute settlement procedures.” See also Howard Johnson Co. v. Hotel Em- ployees, 417 U.S. 249, 251 (1974) (“Both agreements contained dispute settlement procedures leading ultimately to arbitration.”). Commenting on a binding arbitration procedure, the Court in William E. Arnold & Co. v. Carpenters District Council, 417 U.S. 12, 17 (1974), stated, “[T]he Board has recognized added policy justifications for deferring to the [parties’] contractual dispute settlement mechanism.” See also Buffalo Forge Co. v. United Steelworkers of Am., 428 U.S. 397, 405, 407 (1976) (“dispute-settlement procedures” and “private dispute settlement mechanisms”). The court erred in failing to give the statutory terms their ordinary meaning. 3. If arbitration is not an informal procedure, then the MMWA prohibits it. The Fifth Circuit has concluded that the FTC lacks the power to regulate “binding arbitra- tion [because it] is not normally considered an informal | procedure.” Walton v. Rose Mobile Homes, LLC, 298 F.3d 470, 477 (5th Cir. 2002). This analysis is incorrect for two reasons. First, courts and ccmmentators — and even the Ameri- can Arbitration Association — regard arbitration as an informal procedure. The House Report on the Dispute Resolution Act, passed in 1980, referred to “arbitration, mediation, and conciliation” as “informal methods” of SS! eRe Te | 7 dispute settlement. H.R. Rep. 96-492, pt. 1, at 14 (1979), reprinted in 1980 U.S.C.C.A.N. 3, 6. Writing in 1980, the President of the American Arbitration Association said, “Arbitration procedures are generally informal.” Robert Coulson, Business Arbitration -— What You Need to Know 4 (1980); see NICJ, Staff Studies, supra, at 63. Finally, this court has characterized the arbitration process as one marked by “simplicity, informalit;, and expedition.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985). Second, if arbitration is a formal procedure, then the language of the Act prohibits it. Section 2310(a)(4) allows the FTC to “review the bona fide operation of any dispute settlement procedure.” “The word ‘any’ has an expansive meaning, that is ‘one or some indiscriminately of whatever kind.’” United States v. Gonzales, 520 U.S. 1, 5 (1997). Thus, the FTC may review dispute settlement procedures “of whatever kind”; this includes formal procedures. Yet, notwithstanding the FTC’s power to review “any dispute settlement procedure,” sections 2310(a)(2) and 2310(a)(3) only allow warrantors to create informal proce- dures. “[WJhere Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposefully in the disparate inclusion or exclusion.” Brown v. Gardner, 513 U.S. 115, 120 (1994). By allowing the FTC to review “any dispute settlement procedure,” 15 U.S.C. § 2310(a)(4), but only allowing warrantors to create “informal dispute settlement proce- dures,” 15 U.S.C. § 2310(a)(3), Congress prohibited formal procedures. 4. The Eleventh Circuit’s opinion renders portions of the MMWA meaningless. Having permitted warrantors to create non-binding procedures only if those procedures comply with FTC rules, did Congress intend to permit warrantors to create similar procedures that are exempt from FTC regulation? The clear answer to this question is no. Any other result would render meaningless the por- tions of the Act regulating dispute settlement procedures. en eee ee 8 No functional difference exists between dispute settlement under the MMWA procedures and arbitration except that arbitration “is usually binding on the parties.” Compare American Arbitration Association, Supplemen- tary Procedures for the Resolution of Consumer Related Disputes, Glossary of Terms, “Arbitration” (Mar. 1, 2002), available at http://adr.org., with 16 C.F.R. § 703.5 (describ- ing mechanism procedures). That, however, is not a sufficient basis to distinguish arbitration from MMWA procedures. The FAA does not require that arbitration be binding, see Wolsey, Ltd. v. Foodmaker, Inc., 144 F.3d 1205, 1209 (9th Cir. 1998); Homes of Legend, Inc. v. McCollough, 776 So. 2d 741 (Ala. 2000), and when Congress passed the MMWA, Pennsylvania and several other states recognized non-binding arbitration. See Maurice Rosenberg & Myra Schubin, Trial by Lawyer: Compulsory Arbitration of Small Claims in Pennsylvania, 74 Harv. L. Rev. 448 (1961); NICJ, Staff Studies, supra, at 72-83 (1973). Fed- eral courts now have a similar program, 28 U.S.C. § 657, and statutes in over half the states recognize some form of non-binding arbitration. If the MMWA does not apply to arbitration, then any warrantor may obtain the benefits of warranty settlement procedures, but escape FTC regulation, by stating in its warranty, “The dispute settlement procedure created in this document is arbitration; it is not intended to be an informal dispute settlement procedure regulated by the Magnuson Moss Warranty Act.” Why would Congress regulate some warranty procedures, but leave others immune from regulation? Since arbitration is not required to be binding, the Eleventh Circuit has left no circumstance under which a warrantor must comply with the FTC regulations. If a dispute settlement procedure is binding, then the warran- tor may argue, “It’s not a MMWA procedure; it’s binding arbitration.” If the dispute settlement procedure is non- binding, but violates some other FTC regulation, then the 9 warrantor may argue, “It’s not a MMWA procedure; it’s non-binding arbitration.” To believe that Congress intended this result, one must believe that “Congress intended the obligations established by the Act to be open to evasion by subter- fuges.” Mourning v. Family Publ’n Serv., Inc., 411 U.S. 356, 371 (1972). Surely this is not the result that Congress labored over five years to create. B. Legislative History: Congress Intended for Warranty Procedures to be Non- binding. “The Davises argue[d] that Congress considered all methods of dispute resolution, including arbitration, before allowing warrantors to pursue only informal, non- binding settlement procedures.” App. at 13-14. The Elev- enth Circuit rejected this argument, stating, “[L]egislative history only addresses ‘internal [sic] dispute settlement procedures;’ it never addresses the role of binding arbitra- tion.” App. at 13. Again, the Eleventh Circuit is incorrect; it ignored the legislative history. Senator Magnuson introduced the first version of the MMWA on October 27, 1969, S. 3074, 91st Cong., 115 Cong. Rec. 31483 (1969), and the President signed the Act over five years later on January 4, 1975. Pub. Law No. 93-637, 88 Stat. 2183 (1975). During that period, the National Institute for Consumer Justice (NICJ) conducted a study of “voluntary settlement procedures, including arbitration” at the President’s direction. Richard Nixon, Pub. Papers ’ The court repeatedly referred to the statutory procedures as “internal dispute settlement procedures.” App. at 13, 17. Although this language appears in the conference report, it does not appear in the statute. The conference report reflects, however, that Congress intended to regulate all “internal or other private dispute settlement procedures,” which would include external procedures. S. Conf. Rep. No. 93-1408, at 26 (1974), reprinted in 1974 U.S.C.C.AN. 7755, 7758-59; see pages 17- 18 infra. 10 209 (1971) (requesting study); National Institute for Consumer Justice, Redress of Consumer Grievances (1973) {hereinafter NICJ, Redress of Grievances] (presenting results of study). During debates on the MMWA, Senator Dole argued | that Congress had “insufficient data on the nature and frequency of consumer disputes and on the effectiveness of existing procedures such as small claims courts, class actions, and private dispute settlement techniques, includ- ing arbitration in resolving grievances.” 117 Cong. Rec. 39626 (1971). On November 8, 1971, the Senate passed a version of the Act that authorized a study “of existing and potential and voluntary settlement procedures, including arbitration.” 117 Cong. Rec. 39876, 39880 (1971) (passing Senate Bill 986). The bill thus defined arbitration as a type of dispute settlement procedure. Public hearings on the MMWA spanned three sessions of Congress. See Adequacy of Consumer Redress Mecha- nisms: Joint Hearing Before the Subcomm. on Consumers of the Senate Comm. on Commerce and the Subcomm. on the Representation of Citizens’ Interests of the Senate Comm. on the Judiciary, 93d Cong. (1973) [hereinafter Redress Hearings); Consumer Warranty Protection — 1973: Hearings on H.R. 20 and H.R. 5021 Before the Subcomm. on Commerce and Finance of the House Comm. on Inter- state and Foreign Commerce, 93d Cong. (1973) (hereinafter 1973 House Hearings]; Consumer Warranty Protection: Hearings on H.R. 6313, H.R. 6314, H.R. 261, H.R 4809, H.R. 5307, H.R. 10673 (and Similar and Identical Bills) Before the Subcomm. on Commerce and Finance of the House Comm. on Interstate and Foreign Commerce, 92d Cong. (1971) [hereinafter 1971 House Hearings]; Warran- ties and Guaranties: Hearings Before the Subcomm. on Commerce and Finance of the House Comm. on Interstate and Foreign Commerce, 91st Cong. (1970) [hereinafter 1970 House Hearings]; Consumer Products Warranties and Improvement Act of 1971: Hearings on S. 986 Before the Consumer Subcomm. of the Senate Comm. on Commerce, 92d Cong. (1971) [hereinafter 1971 Senate Hearings); Consumer Product Warranty Act: Hearings on S. 3074 11 Before the Consumer Subcomm. of the Senate Comm. on Commerce, 91st Cong. (1970) [hereinafter 1970 Senate Hearings]. Although the original version of the MMWA encour- aged warrantors to establish informal dispute settlement procedures, it did not authorize the FTC to regulate the procedures, and it did not require consumers to exhaust them before filing suit. S. 3074, 91st Cong. § 16, 115 Cong. Rec. 31483, 31485 (1969). Witnesses agreed that arbitra- tion was an informal dispute settlement procedure, but they disagreed about whether the FTC should regulate it. The Chairman of the Federal Trade Commission argued, “Since an arbitration remedy can be formulated and administered in a variety of ways, we recommend that the administering agency be authorized to lay down the standards to which this arbitration remedy must conform.” 1970 House Hearings, supra, at 64 (statement of Miles W. Kirkpatrick, Chairman of the FTC). Industry representa- tives disagreed, arguing, “To require governmental super- vision of our effort, and the efforts of all independent organizations that undertake to provide procedures for arbitrating consumer claims would delay and inhibit their work.” See 1970 Senate Hearings, supra, at 153 (statement of George P. Lamb, General Counsel, Associations of Home Appliance Manufacturers). Congress accepted the FTC’s recommendation. As passed, the Act authorizes the FTC to regulate dispute settlement procedures. 15 U.S.C. § 2310(a)(2) & 2310(a)(4). Wi Court rationale, and we conclude that its interpretation is unreasonable. See McMahon, 482 U.S. at 238, 107 S.Ct. at 2343 (refusing to follow Congress’ prohibition of arbitra- tion in the Securities Exchange Act of 1934’s legislative history when Congress’ motive was contradictory to Supreme Court rationale). We also conclude that the FTC’s additional rationale is unreasonable. Although the FTC first stated that it looked to a subcommittee staff report (which appears to no ionger 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 McMa- hon, 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 App. 22 individuals, say, complaining about a product, who need a less expensive alternative to litigation.”). The dissent in Walton, which holds that the FTC regulations are reasonable, admits that “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.” 298 F.3d at 476 (King, dissenting) (citing McMahon, 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 admission that its actions were “based on the court of appeals decision following Wilko, ... that agreements to arbitrate Rule 10b-5 claims were not, in fact, enforceable”). The Walton dissent distinguishes this case from McMahon based on a recent FTC regulatory review statement: The Commission examined the legality and the merits of mandatory binding arbitration clauses in written consumer products warranties when it promulgated Rule 703 in 1975. Although several industry representatives at that time had rec- ommended that the Rule allow warrantors to re- quire consumers to submit to binding arbitration, the Commission rejected that view as being con- trary to the congressional intent. The Commis- sion based this decision on its analysis of the plain language of the Warranty Act. 298 F.3d at 487 (King, dissenting and adding emphasis) (quoting 64 Fed.Reg. 19700, 19708 (Apr. 22, 1999)). In the next paragraph, however, the FTC reaffirms its original rationale that it “is not prepared ... to develop guidelines App. 23 for a system in which consumers would commit them- selves, at the time of product purchase, to resolve any difficulties in a binding, but non-judicial, proceeding. The Commission is not now convinced that any guidelines which it set out could ensure sufficient protection for consumers.” 64 Fed.Reg. 19700, 19708 (Apr. 22, 1999) (citing 40 Fed.Reg. 60167, 60210 (1975)). As we have previously explained, this interpretation is no longer valid based on the Supreme Court’s abandonment of its hostile attitude toward arbitration. In light of the Supreme Court’s acknowledgment and continual enforcement of the strong federal policy toward arbitration, we conclude this rationale to be based on an impermissible construction of the statute. Thus, we conclude that the FTC’s interpreta- tion of the MMWA is unreasonable, and we decline to defer to the FTC regulations of the MMWA regarding binding arbitration in written warranties. V. CONCLUSION After a thorough review of the MMWA and the FAA, combined with the strong federal policy favoring arbitra- tion, we hold that written warranty claims arising under the Magnuson-Moss Warranty Act may be subject to valid binding arbitration agreements. Accordingly, we reverse * The FTC admits that, under the MMWA, “warrantors are not precluded from offering « binding arbitration option to consumers after a warranty dispute has arisen.” 64 Fed.Reg. 19700, 19708 (Apr. 22, 1999) (citing 40 Fed.Reg. 60168, 60211 (1975)). As to pre-dispute binding arbitration, however, “[tJhe Commission believes that [its original] interpretation continues to be correct.” 64 Fed.Reg. 19700, 19708 (Apr. 22, 1999). App. 24 the judgment of the district court and remand this case for further proceedings consistent with this opinion. REVERSED and REMANDED. , App. 25 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF ALABAMA NORTHERN DIVISION MICHAEL SHANE ) DAVIS, et al., ) an ) _— ) Civil Action No. v. ) 01-D-415-N SOUTHERN ENERGY” HOMES, INC.,et al, ) Defendants. MEMORANDUM OPINION AND ORDER (Filed Jun. 1, 2001) On October 12, 1999, Plaintiffs Michael and Heather Davis (“Plaintiffs”) purchased a manufactured home, constructed by Defendant Southern Energy Homes, Inc. (“Southern”), from Bilo Homes, Inc. (“Bilo”). Plaintiffs allege that they have discovered multiple defects, for which Southern is responsible, and that Southern has failed to correct the problems. On March 2, 2001, Plaintiffs commenced this action in the Circuit court of Lowndes County, asserting claims against Southern for breach of express and implied warranties, violations of the Magnuson- Moss Warranty-Trade Commission Act (“Magnuson-Moss Act”), 15 U.S.C. §§ 2301, et seg., negligent and wanton repair, and fraud. Plaintiffs assert similar claims against Bilo and Bilo’s sales agent. Defendants removed this case April 6, 2001. (Notice of Removal, Doc. No. 2.) In lieu of an Answer, Southern filed 2 Motion to Dismiss Or, Alternatively, To Compel Arbitra- tion (“Mot.”) on April 20, 2001. The basis for dismissal is App. 26 that Plaintiffs’ sole remedy is arbitration. Thus, the issue before the court is whether Plaintiffs claims are due to be submitted to arbitration. After careful consideration of the arguments of counsel, relevant law, and the record as a whole, the court finds that Southern’s Motion is due to be denied. I. JURISDICTION The court exercises jurisdiction over this action pursuant to 28 U.S.C. § 1331, 28 U.S.C. § 1332, and the Magnuson-Moss Act, 15 U.S.C. § 2310(d). II, FACTUAL BACKGROUND In connection with the purchase of their manufac- tured home, Plaintiffs entered into a binding arbitration agreement with Southern. (McNutt Decl. 73, Ex. A attached to McNutt Decl.) The agreement provides in relevant part: All disputes not barred by the applicable statutes of limitation or otherwise barred by law, result- ing from or arising out of the design, manufac- ture, warranty or repair of the manufactured home, (including but not limited to: the terms of this arbitration agreement and all clauses herein contained, their breath and scope, and any term of any agreement contemporaneously entered into by the parties concerning any goods or ser- vices manufactured or provided by Southern En- ergy Homes, Inc.; the condition of the manufactured home; the conformity of the manu- factured home to federal building standards; the representations, promises, undertakings, war- ranties or covenants made by Southern Energy App. 27 Homes, Inc., (if any); or otherwise dealing with the manufactured home), will be submitted to Binding Arbitration, pursuant to the provisions of 9 U.S.C. section 1 et seq. * * * Any party to this agreement who fails or refuses to arbitrate in accordance with the terms of this pre-dispute binding arbitration agreement shall, in addition to any other relief awarded through arbitration, be taxed by the arbitrator or arbitra- tors with all costs, including reasonable attor- neys|[’] fees, of the other party who had to resort to judicial or other means of compelling arbitra- tion in accordance with the terms herein con- tained. THIS ARBITRATION SHALL BE IN LIEU OF ANY CIVIL LITIGATION IN ANY COURT, AND IN LIEU OF ANY TRIAL BY JURY. (Ex. A to McNutt Decl.) In addition, Plaintiffs were given Southern’s Owner’s Manual in connection with the purchase of their manufac- tured home. The Manual sets forth Southern’s “One Year Limited Warranty,” which also contains a binding arbitra- tion provision. (McNutt Decl. J 3, Ex. B to McNutt Decl.) The arbitration provision contained in the Limited War- ranty is similar in all material respects to the provisions contained in the binding arbitration agreement. Ill. FEDERAL ARBITRATION ACT Section 2 of the Federal Arbitration Act (“FAA”) pro- vides that a written agreement to arbitrate in a contract involving interstate commerce “shall be valid, irrevocable, App. 28 and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ 9 U.S.C. § 2. The effect of § 2 is “to create a body of federal substantive law of arbitrability, applicable to any arbitration agree- ment within the coverage of the Act.” Moses H. Cone Mem Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). Section 3 provides for the stay of proceedings in federal district courts when an issue in the proceedings is refer- able to arbitration. 9 U.S.C. §3. Section 4 provides for orders compelling arbitration when one party has failed, neglected, or refused to comply with an arbitration agree- ment. 9 U.S.C. § 4. L Whether an arbitration provision is enforceable is a question of law. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985); Kelly v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 985 F.2d 1067 (11th Cir. 1993). Any doubts about the scope of arbitrable issues should be resolved in favor of arbitration, even if the result is piecemeal litiga- tion. See Byrd, 470 U.S. at 218-21; Moses H. Cone, 460 U.S. at 24; Kelly, 985 F.2d at 1069. ' Plaintiffs do not contest that the contracts in this action satisfy the interstate commerce requirement of the FAA. Further, after an independent review of the record, the court finds sufficient facts to demonstrate this requirement is satisfied. Accordingly, the court finds that, for the purposes of this Memorandum Opinion and Order, Plaintiffs’ contracts satisfy this jurisdictional prerequisite of the FAA. See generally, Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265 (1995); Staples v. Money Tree, Inc., 936 F. Supp. 856 (M.D. Ala. 1996). App. 29 IV. DISCUSSION On January 8, 1999, the Supreme Court of Alabama held that the Magnuson-Moss Act precluded enforcement of an arbitration provision as to written warranty claims. See Southern Energy Homes, Inc. v. Lee, 732 So.2d 994 (Ala. 1999). The decision was based upon Judge Thomp- son’s reasoning in Wilson v. Waverlee Homes, Inc., 954 F. Supp. 1530 (M.D. Ala. 1997). Seventeen months later, in Southern Energy Homes, Inc. v. Ard, 772 So.2d 1131 (Ala. 2000), the Supreme Court of Alabama overruled Lee. In Yeomans v. Homes of Legend, Inc., 2001 WL 237313 (M.D. Ala. 2001), this court declined to follow Ard. Yeo- mans reiterated Waverlee’s conclusion that Congress intended to preclude binding arbitration of written or express warranty claims arising under the Magnuson- Moss Act. Jd. at *7. Applying this reasoning, the court found that the plaintiffs in Yeomans could be compelled to arbitrate their implied warranty and state law claims, but that the Magnuson-Moss Act mandated that a judicial forum for the plaintiffs’ written or express warranty claims. Id. at *8. The court’s findings in Yeomans resulted in piecemeal litigation — a portion of the plaintiffs’ claims in arbitration and a portion of the plaintiffs’ claim in court — but the FAA permits such. See Byrd, 470 U.S. at 218-21; Moses H. Cone, 460 U.S. at 24; Kelly, 985 F.2d at 1069. In the instant case, Southern wishes to avoid such a result. Specifically, Southern indicates that it “has no interest in arbitrating some claims and not others.” (Reply { 4.) Therefore, knowing that the court is bound by its decision in Yeomans as to Plaintiffs’ written warranty claims, Southern has elected to resolve all claims, even those App. 30 encompassed by the arbitration agreement, in a judicial forum. (Id. 49 3, 4.) Thus, the court need not address Plaintiffs’ arguments against arbitration of their own non- warranty and state law claims. V. ORDER Based on the foregoing, it is CONSIDERED and ORDERED that Southern’s Motion to Dismiss Or, Alter- natively, To Compel Arbitration be and the same is hereby DENIED. DONE this the Ist day of June, 2001. /s/ Ira DeMent UNITED STATES DISTRICT JUDGE App. 31 IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT No. 01-13831-HH MICHAEL SHANE DAVIS, HEATHER N. DAVIS, versus Plaintiffs-Appellees, SOUTHERN ENERGY HOMES, a. en Defendant-Appellant, BILO HOMES, INC., a corporation DAVID L. SMITHERMAN Defendant. On Appeal from the United States District Court for the Middle District of Alabama ON PETITION(S) FOR REHEARING AND PETITION(S) FOR REHEARING EN BANC (Opinion , Lith Cir., 19_, _- F.2d ___). (Filed Nov. 14, 2002) Before: ANDERSON and DUBINA, Circuit Judges, and MILLS’, District Judge. * Honorable Richard Mills, U.S. District Judge for the Central District of Illinois, sitting by designation. App. 32 PER CURIAM: The Petition(s) for Rehearing are DENIED and no Judge in regular active service on the Court having requested that the Court be polled on rehearing en banc (Rule 35, Federal Rules of Appellate Procedure), the Petition(s) for Rehearing En Banc are DENIED. ENTERED FOR THE COURT: /s/ Joel F. Dubina UNITED STATES CIRCUIT JUDGE App. 33 9 U.S.C. § 2. Validity, irrevocability, and enforcement of agreements to arbitrate. 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 15 U.S.C. § 2302. Rules governing contents of warranties (a) Full and conspicuous disclosure of terms and conditions; additional requirements for con- tents. In order to improve the adequacy of information available to consumers, prevent deception, and improve competition in the marketing of consumer products, any warrantor warranting a consumer product to a consumer by means of a written warranty shall, to the extent re- quired by rules of the Commission, fully and conspicuously disclose in simple and readily understood language the terms and conditions of such warranty. Such rules may require inclusion in the written warranty of any of the following items among others: (1) The clear identification of the names and addresses of the warrantors. (2) The identity of the party or parties to whom the warranty is extended. App. 34 (3) The products or parts covered. (4) A statement of what the warrantor will do in the event of a defect, malfunction, or failure to conform with such written warranty — at whose expense — and for what period of time. (5) A statement of what the consumer must do and expenses he must bear. (6) Exceptions and exclusions from the terms of the warranty. (7) The step-by-step procedure which the con- sumer should take in order to obtain perform- ance of any obligation under the warranty, including the identification of any person or class of persons authorized to perform the obligations set forth in the warranty. (8) Information respecting the availability of any informal dispute settlement procedure of- fered by the warrantor and a recital, where the warranty so provides, that the purchaser may be required to resort to such procedure before pur- suing any legal remedies in the courts. (9) A brief, general description of the legal remedies available to the consumer. (10) The time at which the warrantor will per- form any obligations under the warranty. (11) The period of time within which, after no- tice of a defect, malfunction, or failure to conform with the warranty, the warrantor will perform any obligations under the warranty. (12) The characteristics or properties of the products, or parts thereof, that are not covered by the warranty. App. 35 (13) The elements of the warranty in words or phrases which would not mislead a reasonable, average consumer as to the nature or scope of the warranty. (b) Availability of terms to consumer; manner and form for presentation and display of informa- tion; duration; extension of period for written warranty or service contract. (1)(A) The Commission shall prescribe rules requiring that the terms of any written warranty on a consumer product be made avail- able to the consumer (or prospective consumer) prior to the sale of the product to him. (B) The Commission may prescribe rules for determining the manner and form in which information with respect to any written warranty of a consumer product shall be clearly and conspicuously presented or displayed so as not to mislead the reasonable, average consumer, when such information is contained in advertising, labeling, point-of-sale material, or other representations in writing. (2) Nothing in this chapter (other than paragraph (3) of this subsection) shall be deemed to authorize the Com- mission to prescribe the duration of written warranties given or to require that a consumer product or any of its components be warranted. (3) The Commission may prescribe rules for extend- ing the period of time a written warranty or service contract is in effect to correspond with any period of time in excess of a reasonable period (not less than 10 days) during which the consumer is deprived of the use of such consumer product by reason of failure of the product to conform with the written warranty or by reason of the App. 36 failure of the warrantor (or service contractor) to carry out such warranty (or service contract) within the period specified in the warranty (or service contract). (c) Prohibition on conditions for written or implied warranty; waiver by Commission. No war- rantor of a consumer product may condition his written or implied warranty of such product on the consumer’s using, in connection with such product, any article or service (other than article or service provided without charge under the terms of the warranty) which is identified by brand, trade, or corporate name; except that the prohibi- tion of this subsection may be waived by the Commission if — (1) the warrantor satisfies the Commission that the warranted product will function properly only if the article or service so identified is used in connection with the warranted product, and (2) the Commission finds that such a waiver is in the public interest. The Commission shall identify in the Federal Register, and permit public comment on, all applications for waiver of the prohibition of this subsection, and shall publish in the Federal Register its disposition of any such applica- tion, including the reasons therefor. (d) Incorporation by reference of detailed substantive warranty provisions. The Commission may by rule devise detailed substantive warranty provi- sions which warrantors may incorporate by reference in their warranties. (e) Applicability to consumer products costing more than $5. The provisions of this section apply only to App. 37 warranties which pertain to consumer products actually costing the consumer more than $5. 15 U.S.C. § 2309. Procedures applicable to promul- gation of rules by Commission. (a) Oral presentation. Any rule prescribed under this chapter shall be prescribed in accordance with section 553 of title 5; except that the Commission shall give interested persons an opportunity for oral presentations of data, views, and arguments, in addition to written sub- missions. A transcript shall be kept of any oral presenta- tion. Any such rule shall be subject to judicial review under section 57a(e) of this title in the same manner as rules prescribed under section 57a(a)(1)(B) of this title, except that section 57a(e)(3)(B) of this title shall not apply. (b) Warranties and warranty practices in- volved in sale of used motor vehicles. The Commis- sion shall initiate within one year after January 4, 1975, a rulemaking proceeding dealing with warranties and warranty practices in connection with the sale of used motor vehicles; and, to the extent necessary to supplement the protections offered the consumer by this chapter, shall prescribe rules dealing with such warranties and prac- tices. In prescribing rules under this subsection, the Commission may exercise any authority it may have under this chapter, or other law, and in addition it may require disclosure that a used motor vehicle is sold without any warranty and specify the form and content of such disclo- sure. App. 38 15 U.S.C. § 2310. Remedies in consumer disputes. (a) Informal dispute settlement procedures; establishment; rules setting forth minimum re- quirements; effect of compliance by warrantor; review of informal procedures or implementation by Commission; application to existing informal procedures. (1) Congress hereby declares it to be its policy to encourage warrantors to establish procedures whereby consumer disputes are fairly and expeditiously settled through informal dispute settlement mechanisms. (2) The Commission shall prescribe rules setting forth minimum requirements for any informal dispute settlement procedure which is incorporated into the terms of a written warranty to which any provision of this chapter applies. Such rules shall provide for participation in such procedure by independent or governmental enti- ties. (3) One or more warrantors may establish an infor- mal dispute settlement procedure which meets the re- quirements of the Commission’s rules under paragraph (2). If- (A) a warrantor establishes such a procedure, (B) such procedure, and its implementation, meets the requirements of such rules, and (C) he incorporates in a written warranty a re- quirement that the consumer resort to such pro- cedure before pursuing any legal remedy under this section respecting such warranty, then (i) the consumer may not commence a civil action (other than a class action) under subsection (d) of this section unless he initially resorts to such procedure; and App. 39 (ii) a class of consumers may not proceed in a class action under subsection (d) of this Section except to the extent the court determines necessary to establish the represen- tative capacity of the named plaintiffs, unless the named plaintiffs (upon notifying the defendant that they are named plaintiffs in a class action with respect to a war- ranty obligation) initially resort to such procedure. In the case of such a class action which is brought in a district court of the United States, the representative capacity of the named plaintiffs shall be established in the application of rule 23 of the Federal Rules of Civil Procedure. In 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. (4) The Commission on its own initiative may, or upon written complaint filed by any interested person shall, review the bona fide operation of any dispute set- tlement procedure resort to which is stated in a written warranty to be a prerequisite to pursuing a legal remedy under this section. If the Commission finds that such procedure or its implementation fails to comply with the requirements of the rules under paragraph (2), the Com- mission may take appropriate remedial action under any authority it may have under this chapter or any other provision of law. (5) Until rules under paragraph (2) take effect, this subsection shall not affect the validity of any informal dispute settlement procedure respecting consumer war- ranties, but in any action under subsection (d) of this section, the court may invalidate any such procedure if it finds that such procedure is unfair. App. 40 (b) Prohibited acts. It shall be a violation of section 45(a)(1) of this title for any person to fail to comply with any requirement imposed on such person by this chapter (or a rule thereunder) or to violate any prohibition contained in this chapter (or a rule thereunder). (c) Injunction proceedings by Attorney Gen- eral or Commission for deceptive warranty, noncompliance with requirements, or violating prohibitions; procedures; definitions. (1) The district courts of the United States shall have jurisdiction of any action brought by the Attorney General (in his capacity as such), or by the Commission by any of its attorneys designated by it for such purpose, to restrain (A) any warrantor from making a deceptive warranty with respect to a consumer product, or (B) any person from failing to comply with any requirement imposed on such person by or pursuant to this chapter or from violating any prohibition contained in this chapter. Upon proper showing that, weighing the equities and considering the Commission’s or Attorney General’s likelihood of ultimate success, such action would be in the public interest and after notice to the defendant, a tempo- rary restraining order or preliminary injunction may be granted without bond. In the case of an action brought by the Commission, if a complaint under section 45 of this title is not filed within such period (not exceeding 10 days) as may be specified by the court after the issuance of the temporary restraining order or preliminary injunction, the order or injunction shall be dissolved by the court and be of no further force and effect. Any suit shall be brought in the district in which such person resides or transacts business. Whenever it appears to the court that the ends of justice require that other persons should be parties in App. 41 the action, the court may cause them to be summoned whether or not they reside in the district in which the court is held, and to that end process may be served in any district. (2) For the purposes of this subsection, the term “deceptive warranty” means (A) a written warranty which (i) contains an affirmation, promise, description, or repre- sentation which is either false or fraudulent, or which, in light of all of the circumstances, would mislead a reason- able individual exercising due care; or (ii) fails to contain information which is necessary in light of all of the cir- cumstances, to make the warranty not misleading to a reasonable individual exercising due care; or (B) a written warranty created by the use of such terms as “guaranty” or “warranty”, if the terms and conditions of such warranty so limit its scope and application as to deceive a reason- able individual. (d) Civil action by consumer for damages, etc.; jurisdiction; recovery of costs and expenses; cogni- zable claims. (1) Subject to subsections (a)(3) and (e) of this section, a consumer who is 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, may bring suit for damages and other legal and equitable relief — (A) in any court of competent jurisdiction in any State or the District of Columbia; or (B) in an appropriate district court of the United States, subject to paragraph (3) of this subsection. (2) If a consumer finally prevails in any action brought under paragraph (1) of this subsection, he may be App. 42 allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of cost and expenses (including attorneys’ fees based on actual time expended) determined by the court to have been reasonably incurred by the plaintiff for or in connection with the commence- ment and prosecution of such action, unless the court in its discretion shall determine that such an award of attor- neys’ fees would be inappropriate. (3) No claim shall be cognizable in a suit brought under paragraph (1)(B) of this subsection — (A) if the amount in controversy of any individ- ual claim is less than the sum or value of $25; (B) if the amount in controversy is less than the sum or value of $50,000 (exclusive of interests and costs) computed on the basis of all claims to be determined in this suit; or (C) if the action is brought as a class action, and the number of named plaintiffs is less than one hundred. (e) Class actions; conditions; procedures appli- cable. No action (other than a class action or an action respecting a warranty to which subsection (a)(3) of this section applies) may be brought under subsection (d) of this section for failure to comply with any obligation under any written or implied warranty or service contract, and a class of consumers may not proceed in a class action under such subsection with respect to such a failure except to the extent the court determines necessary to establish the representative capacity of the named plaintiffs, unless the person obligated under the warranty or service contract is afforded a reasonable opportunity to cure such failure to comply. In the case of such a class action (other than a App. 43 class action respecting a warranty to which subsection (a)(3) of this section applies) brought under subsection (d) of this section for breach of any written or implied war- ranty or service contract, such reasonable opportunity will be afforded by the named plaintiffs and they shall at that time notify the defendant that they are acting on behalf of the class. In the case of such a class action which is brought in a district court of the United States, the repre- sentative capacity of the named plaintiffs shall be estab- lished in the application of rule 23 of the Federal Rules of Civil Procedure. (f) Warrantors subject to enforcement of reme- dies. For purposes of this section, only the warrantor actually making a written affirmation of fact, promise, or undertaking shall be deemed to have created a written warranty, and any rights arising thereunder may be enforced under this section only against such warrantor and no other person. PART 700 — INTERPRETATIONS OF MAGNUSON- MOSS WARRANTY ACT 16 C.F.R. § 700.8: Warrantor’s decision as final. A warrantor shall not indicate in any written war- ranty 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. Nor shall a warrantor or service contractor state that it alone shall determine what is a defect under the agreement. Such statements are deceptive since section 110(d) of the Act App. 44 gives state and federal courts jurisdiction over suits for breach of warranty and service contract. PART 703 - INFORMAL DISPUTE SETTLEMENT PROCEDURES 16 C.F.R. § 703.1 Definitions. (a) The Act means the Magnuson-Moss Warranty — Federal Trade Commission Improvement Act, 15 U.S.C. 2301, et seq. (b) Consumer product means any tangible personal property which is distributed in commerce and which is normally used for personal, family, or household purposes (including any such property intended to be attached to or installed in any real property without regard to whether it is so attached or installed). (c) Written warranty means: (1) Any written affirmation of fact or written prom- ise made in connection with the sale of a consumer product by a supplier to a buyer which relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect free or will meet 2. specified level of performance over a specified period of time, or (2) Any undertaking in writing in connection with the sale by a supplier of a consumer product to refund, repair, replace, or take other remedial action with respect to such product in the event that such product fails to meet the specifications set forth in the undertaking, which written affirmation, promise or undertaking becomes part App. 45 of the basis of the bargain between a supplier and a buyer for purposes other than resale of such product. (d) Warrantor means any person who gives or offers to give a written warranty which incorporates an informal dispute settlement mechanism. (e) Mechanism means an informal dispute settle- ment procedure which is incorporated into the terms of a written warranty to which any provision of Title I of the Act applies, as provided in section 110 of the Act. (f) Members means the person or persons within a Mechanism actually deciding disputes. (g) Consumer means a buyer (other than for pur- poses of resale) of any consumer product, any person to whom such product is transferred during the duration of a written warranty applicable to the product, and any other person who is entitled by the terms of such warranty or under applicable state law to enforce against the warran- tor the obligations of the warranty. (h) On the face of the warranty means: (1) If the warranty is a single sheet with printing on both sides of the sheet, or if the war- ranty is comprised of more than one sheet, the page on which the warranty text begins; (2) If the warranty is included as part of a longer document, such as a use and care manual, the page in such document on which the war- ranty text begins. App. 46 16 C.F.R. § 703.5. Operation of the Mechanism. (a) The Mechanism shall establish written operating procedures which shall include at least those items speci- fied in paragraphs (b) through (j) of this section. Copies of the written procedures shall be made available to any person upon request. (b) Upon notification of a dispute, the Mechanism shall immediately inform both the warrantor and the consumer of receipt of the dispute. (c) The Mechanism shall investigate, gather and organize all information necessary for a fair and expedi- tious decision in each dispute. When any evidence gath- ered by or submitted to the Mechanism raises issues relating to the number of repair attempts, the length of repair periods, the possibility of unreasonable use of the product, or any other issues relevant in light of Title I of the Act (or rules thereunder), including issues relating to consequential damages, or any other remedy under the Act (or rules thereunder), the Mechanism shall investigate these issues. When information which will or may be used in the decision, submitted by one party, or a consultant under section 703.4(b) of this part, or any other source tends to contradict facts submitted by the other party, the Mechanism shall clearly, accurately, and completely disclose to both parties the contradictory information (and its source) and shall provide both parties an opportunity to explain or rebut the information and to submit additional materials. The Mechanism shall not require any informa- tion not reasonably necessary to decide the dispute. (d) If the dispute has not been settled, the Mecha- nism shall, as expeditiously as possible but at least within App. 47 40 days of notification of the dispute, except as provided in paragraph (e) of this section: (1) Render a fair decision based on the in- formation gathered as described in paragraph (c) of this section, and on any information submitted at an oral presentation which conforms to the re- quirements of paragraph (f) of this section (A deci- sion shall include any remedies appropriate under the circumstances, including repair, replacement, refund, reimbursement for expenses, compensa- tion for damages, and any other remedies avail- able under the written warranty or the Act (or rules thereunder); and a decision shall state a specified reasonable time for performance); (2) Disclose to the warrantor its decision and the reasons therefor; (3) If the decision would require action on the part of the warrantor, determine whether, and to what extent, warrantor will abide by its decision; and (4) Disclose to the consumer its decision, the reasons therefor, warrantor’s intended ac- tions (if the decision would require action on the part of the warrantor), and the information de- scribed in paragraph (g) of this section. For pur- poses of paragraph (d) of this section a dispute shall be deemed settled when the Mechanism has ascertained from the consumer that: (i) The dispute has been settled to the consumer’s satisfaction; and (ii) The settlement contains a specified reasonable time for performance. App. 48 (e) The Mechanism may delay the performance of its duties under paragraph (d) of this section beyond the 40 day time limit: (1) Where the period of delay is due solely to failure of a consumer to provide promptly his or her name and address, brand name and model number of the product involved, and a statement as to the nature of the defect or other complaint; or (2) For a7 day period in those cases where the consumer has made no attempt to seek re- dress directly from the warrantor. (f) The Mechanism may allow an oral presentation by a party to a dispute (or a party’s representative) only if: (1) Both warrantor and consumer expressly agree to the presentation; (2) Prior to agreement the Mechanism fully discloses to the consumer the following informa- tion: (i) That the presentation by either party will take place only if both parties so agree, but that if they agree, and one party fails to appear at the agreed upon time and place, the presentation by the other party may still be al- lowed; (ii) That the members will decide the dis- pute whether or not an oral presentation is made; (iii) The proposed date, time and place for the presentation; and (iv) A brief description of what will occur at the presentation including, if applicable, App. 49 parties’ rights to bring witnesses and/or coun- sel; and (3) Each party has the right to be present during the other party’s oral presentation. Noth- ing contained in this paragraph (b) of this section shall preclude the Mechanism from allowing an oral presentation by one party, if the other party fails to appear at the agreed upon time and place, as long as all of the requirements of this paragraph have been satisfied. (g) The Mechanism shall inform the consumer, at the time of disclosure required in paragraph (d) of this section that: (1) If he or she is dissatisfied with its deci- sion or warrantor’s intended actions, or eventual performance, legal remedies, including use of small claims court, may be pursued; (2) The Mechanism’s decision is admissible in evidence as provided in section 110(a)(3) of the Act; and (3) The consumer may obtain, at reason- able cost, copies of all Mechanism records relat- ing to the consumer’s dispute. (h) If the warrantor has agreed to perform any obligations, either as part of a settlement agreed to after notification to the Mechanism of the dispute or as a result of a decision under paragraph (d) of this section, the Mechanism shall ascertain from the consumer within 10 working days of the date for performance whether per- formance has occurred. (i) A requirement that a consumer resort to the Mechanism prior to commencement of an action under App. 50 section 110(d) of the Act shall be satisfied 40 days after notification to the Mechanism of the dispute or when the Mechanism completes all of its duties under paragraph (d) of this section, whichever occurs sooner. Except that, if the Mechanism delays performance of its paragraph (d) of this section duties as allowed by paragraph (é) of this section, the requirement that the consumer initially resort to the Mechanism shall not be satisfied until the period of delay allowed by paragraph (e) of this section has ended. (j) Decisions of the Mechanism shall not be legally binding on any person. However, the warrantor shall act in good faith, as provided in section 703.2(g) of this part. In any civil action arising out of a warranty obligation and relating to a matter considered by the Mechanism, any decision of the Mechanism shall be admissible in evidence, as provided in section 110(a)(3) of the Act. App. 51 EXCERPT FROM WARRANTY OF SOUTHERN ENERGY HOMES, INC. BINDING ARBITRATION IF THE PROBLEM IS STILL NOT RESOLVED All disputes between us not resolved as outlined above and not barred by applicable statutes of limitations or other- wise barred by law, resulting from or arising out of the design, manufacture, warranty, or repair of the manufac- tured home, (including but not limited to: the terms of the warranty, the terms of this arbitration agreement, and all clauses herein contained, their breadth and scope, and any term of any agreement contemporaneously entered into by the parties concerning any goods or services manufactured or provided by Southern Energy Homes, Inc.; the condition of the manufactured home; the conformity of the manufac- tured home to federal building standards; the representa- tions, promises, undertakings, warranties or covenants ‘made by Southern Energy Homes, Inc., (if any); or other- wise dealing with the manufactured home); will be sub- mitted to BINDING ARBITRATION, pursuant to the provisions of 9 U.S.C. section 1, et. seq. and according to the Commercial Rules of the American Arbitration Asso- ciation then existing in Addison, Alabama, where Southern Energy Homes, Inc., maintains its principal place of business. The Commercial Rules of the American Arbitra- tion Association shall apply except as follows: (a) The party seeking affirmative relief shall prepay all arbitration filing fees and processing fees. (b) In all disputes in which the matter in controversy is $10,000.00 or less, one arbi- trator shall be selected (from a list of no less than fifteen arbitrators supplied by the American Arbitration Associa- tion) through strikes, in accordance with said Association’s Commercial rules. In all disputes in which the matter in App. 52 controversy exceeds $10,000.00, the arbitrators shall be selected as follows: Southern Energy Homes, Inc., shall select one arbitrator; the purchaser(s) of the manufactured home shall select one arbitrator; the two arbitrators so selected shall select a neutral arbitrator. In the event any issue is raised in the demand for arbitration or counter demand for arbitration (if any) concerning the design, manufacture, repair or condition of the manufactured home, the neutral arbitrator shall be an individual who shall have been gainfully employed in the design, manu- facture or actual repair of manufactured homes, as his or her principal income producing activity, for at least ten years immediately preceding his or her appointment as an arbitrator. Such neutral arbitrator shall be selected by mutual agreement of the arbitrators appointed by the parties. If no agreement on the appointment of such a neutral arbitrator can be agreed upon by the arbitrators appointed by the parties, then the American Arbitration Association shall submit a list of no less than five suitable arbitrators (in accordance with the criteria set forth above), from whom the arbitrators selected shall make their eliminations through the strike method established by the American Arbitration Association. (c) An arbitrator or arbitrators impaneled to hear any dispute brought before them shall be empowered to enter an award of such damages, fees, and costs, as said arbitrator or arbitrators deem just and proper. Notwithstanding, the maximum award permitted, in connection with any dispute submit- ted to said arbitrator or arbitrators, shall not exceed the amount originally demanded by the party seeking affirma- tive relief at the time the demand for arbitration is filed. Any party to this agreement who fails or refuses to arbi- trate in accordance with the terms of chis pre-dispute binding arbitration agreement shall, in addition to any App. 53 other relief awarded through arbitration, be taxed by the arbitrator or arbitrators with all of the costs, including reasonable attorney fees, of the other party who had to resort to judicial or other means of compelling arbitration in accordance with the terms herein contained. THIS ARBITRATION SHALL BE IN LIEU OF ANY CIVIL LITIGATION IN ANY COURT, AND IN LIEU OF ANY TRIAL BY JURY. (R1-11-exhibit 1, at 5-6) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_1071%3A1. Public record. Not legal advice.