Fiser v. Dell Computer Corp.

• Decision Date: 30 April 2007
• Docket Number: No. 25,862.,25,862.
• Citation: 2007 NMCA 087,165 P.3d 328
• Parties: Robert FISER, individually, and on behalf of a class of similarly-situated persons, Plaintiff-Appellant, v. DELL COMPUTER CORPORATION, a/k/a Dell, Inc., Defendant-Appellee.
• Court: Court of Appeals of New Mexico

165 P.3d 328

2007 NMCA 087

Robert FISER, individually, and on behalf of a class of similarly-situated persons, Plaintiff-Appellant, v. DELL COMPUTER CORPORATION, a/k/a Dell, Inc., Defendant-Appellee.

No. 25,862.

Court of Appeals of New Mexico.

April 30, 2007.

Certiorari Granted, No. 30,424, June 26, 2007.

Morgan Law Office, Limited, Ron Morgan, Whitney Buchanan, P.C., Whitney Buchanan, Albuquerque, NM, Feazell & Tighe, LLP, Austin Tighe, Austin, TX, Wallace and Graham, P.A., Robert Perkins, Salisbury, NC, for Appellant.

Reeves & Brightwell LLP, Kim Brightwell, Paul Schlaud, Austin, TX, Rodey, Dickason, Sloan, Akin & Robb, P.A., Edward Ricco, Leslie McCarthy Apodaca, Albuquerque, NM, for Appellee.

OPINION

ROBINSON, Judge.

{1} Plaintiff Robert Fiser (Fiser) appeals an order staying his class action complaint for breach of contract, statutory violations, and equitable relief against Defendant Dell Computer Corporation, a/k/a Dell, Inc. (Dell), and compelling arbitration. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

{2} Fiser ordered a Dell Dimension 4600 computer from Dell's website on November 13, 2003. After receiving the computer, Fiser determined that the amount of memory was less than what was represented on the website. On July 8, 2004, Fiser filed a putative class action suit, alleging that Dell's website contained misrepresentations and omissions about the amount of storage capacity or memory in its computers. Fiser stated claims for breach of contract, breach of express and implied warranty, unjust enrichment, unfair trade practices, false advertising, and equitable and declaratory relief.

{3} Dell moved to stay the district court action and to compel arbitration of Fiser's claims. In its motion, Dell alleged that the parties had agreed to arbitrate based upon the arbitration provision contained in the written terms and conditions that accompanied the purchase of Fiser's computer. The terms and conditions, including the arbitration provision, are set forth as hyperlinks on the website that Fiser used to order the computer. Dell sent a confirmation and an acknowledgment of Fiser's online order by electronic mail. Both the confirmation and the acknowledgment advised Fiser that his purchase was subject to the terms and conditions of sale, and provided a hyperlink to access those terms and conditions. Dell shipped the computer on the same day it was ordered. Included in the shipment was a written copy of Dell's terms and conditions.

{4} Fiser opposed arbitration, contending that he never agreed to arbitrate, and that the arbitration provision contained in the terms and conditions is unconstitutional and/or unconscionable. After additional briefing by both parties and two hearings, the district court granted Dell's motion, and entered an order referring all of Fiser's claims to arbitration. This Court then granted Fiser's application for interlocutory appeal. We provide additional pertinent facts throughout the Opinion.

II. STANDARD OF REVIEW

{5} The question of whether an agreement to arbitrate is valid must be decided by the district court, and it is governed by state contract law. See Santa Fe Techs., Inc. v. Argus Networks, Inc., 2002-NMCA-030, ¶ 52, 131 N.M. 772, 42 P.3d 1221; see DeArmond v. Halliburton Energy Servs., Inc., 2003-NMCA-148, ¶ 9, 134 N.M. 630, 81 P.3d 573 (stating that "[w]hether a valid contract to arbitrate exists is a question of state contract law"). However, state laws or policies that are "specifically hostile to arbitration agreements are preempted by the FAA [Federal Arbitration Act]." Salazar v. Citadel Commc'ns Corp., 2004-NMSC-013, ¶ 8, 135 N.M. 447, 90 P.3d 466 (citing Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996)).

{6} Contrary to Dell's contentions, the district court did not enter findings and conclusions, nor did it take any evidence beyond review of the parties' affidavits and attachments thereto. Therefore, it decided as a matter of law that the parties entered into an arbitration agreement. See DeArmond, 2003-NMCA-148, ¶ 4, 134 N.M. 630, 81 P.3d 573. In reviewing the district court's decision to compel arbitration, we apply the same de novo standard of review used when reviewing a grant of summary judgment. Id. ("We review de novo the grant of the motion to compel arbitration in the same manner we would review a grant of a summary judgment motion. We may reverse the order to compel arbitration if we determine that there are genuine issues of material fact as to whether an agreement to arbitrate exists." (internal citations omitted)); see Alexander v. Calton & Assocs., Inc., 2005-NMCA-034, ¶ 8, 137 N.M. 293, 110 P.3d 509 ("The appropriate standard of review for a district court's grant of a motion to compel arbitration is de novo.").

III. DISCUSSION

A. Choice of Law

{7} First, we consider which state law to apply in determining whether there is a valid agreement to arbitrate. The terms and conditions contain a choice-of-law provision stating: "THIS AGREEMENT AND ANY SALES THEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE

OF TEXAS, WITHOUT REGARD TO CONFLICTS OF LAWS RULES."

{8} Fiser contends that the choice of law provision found in the terms and conditions should not apply to the determination of whether there is indeed a contract. The district court made no findings on whether Texas or New Mexico law should apply in determining whether the parties entered an agreement to arbitrate.

{9} In general, New Mexico looks to the terms of a contract in order to determine the rights of the parties, including the choice of law that should be applied in interpreting that contract. See United Wholesale Liquor Co. v. Brown-Forman Distillers Corp., 108 N.M. 467, 470-71, 775 P.2d 233, 236-37 (1989). We are unaware of any New Mexico cases specifically addressing the issue of whether New Mexico law, instead of the law chosen in the contract, should apply to determine if there even is a contract. However, application of fundamental New Mexico choice-of-law principles suggests that Texas law should apply in determining whether the parties agreed to arbitrate.

{10} New Mexico law allows the parties to stipulate in their contract which law is to apply, so long as the law they choose has a relationship to the contract. Id. at 470, 775 P.2d at 236. Dell's principal place of business is in Texas, and it builds computers in accordance with a customer's specifications in Texas and Tennessee. Therefore, we conclude that Texas has a reasonable relationship to the contract. See id.; cf. Provencher v. Dell, Inc., 409 F.Supp.2d 1196, 1201-02 (C.D.Cal.2006) (applying Texas law to determine the issue of whether the arbitration provision was enforceable because the agreement provided that Texas law would govern; Texas had a substantial relationship to the parties' transaction as Dell's principal place of business was in Texas; it sold products from Texas; and Texas law was not contrary to California public policy); Hubbert v. Dell Corp., 359 Ill.App.3d 976, 296 Ill.Dec. 258, 835 N.E.2d 113, 120 (2005) (applying Texas law because the terms and conditions specified that Texas law should apply, and since "there is no discernible public policy obstacle to enforcing the choice-of-law provision, the parties agree that Texas law applies, Texas bears a reasonable relationship to the parties and the transaction because the defendant's principal place of business is in Texas, and the issues in this case involve basic contract law, so there will be no substantial difference in the outcome of this case if Texas law is applied").

{11} Even though the parties contracted to apply Texas law and Texas bears a reasonable relationship to the agreement, we will refuse to enforce the choice-of-law provision if to do so would offend New Mexico public policy. See United Wholesale Liquor Co., 108 N.M. at 470, 775 P.2d at 236 (stating that "the forum may decline to apply the out-of-state law if it offends the public policy of New Mexico"); accord Reagan v. McGee Drilling Corp., 1997-NMCA-014, ¶¶ 8-9, 123 N.M. 68, 933 P.2d 867 (recognizing that New Mexico courts will enforce a contractual choice-of-law provision unless to do so would violate fundamental principle of justice, or deep-rooted traditions of New Mexico), limited on other grounds by Piña v. Gruy Petroleum Mgmt. Co., 2006-NMCA-063, ¶¶ 20-22, 139 N.M. 619, 136 P.3d 1029. The public policy exception only applies in "extremely limited" circumstances, and requires more than a mere difference among state laws. Reagan, 1997-NMCA-014, ¶ 9, 123 N.M. 68, 933 P.2d 867 (internal quotation marks and citations omitted).

{12} We are unconvinced that application of Texas law to determine whether the parties agreed to arbitrate would violate any fundamental principle, or public policy of New Mexico, nor are we convinced that the outcome of this determination would differ, depending upon whether we applied the law of Texas or New Mexico. Under Texas law, any doubts about whether there is an agreement to arbitrate must be resolved in favor of arbitration. See Dell, Inc. v. Muniz, 163 S.W.3d 177, 181 (Tex.App.2005); AutoNation USA Corp. v. Leroy, 105 S.W.3d 190, 195 (Tex.App.2003). It is not clear that New Mexico has applied the same presumption to this initial determination of whether the parties agreed to arbitrate. See DeArmond, 2003-NMCA-148, ¶ 8, 134 N.M. 630, 81 P.3d 573 (recognizing that "a legally enforceable contract is still a prerequisite for arbitration[,]" and characterizing the holding in First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944-45, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995), as "stating that the presumption in favor of arbitration is reversed when there is a dispute as to the existence of an agreement").

{13} Even though the presumption in favor of arbitration may not apply to the initial determination of the existence of a contract, New Mexico does have a strong public...