188 P.3d 1215 (N.M. 2008), 30,424, Fiser v. Dell Computer Corporation

Docket Nº:30,424.
Citation:188 P.3d 1215, 144 N.M. 464, 2008 -NMSC- 046
Opinion Judge:SERNA, Justice.
Party Name:Robert FISER, individually, and as a representative of a class of persons within the State of New Mexico, Plaintiff-Petitioner, v. DELL COMPUTER CORPORATION, a/k/a Dell, Inc., Defendant-Respondent.
Attorney:Morgan Law Office, Ltd., Ronald Calvin Morgan, Whitney C. Buchanan, P.C., Whitney C. Buchanan, Albuquerque, NM, Feazell & Tighe, L.L.P., Austin Tighe, Austin, TX, for Petitioner. Morgan Law Office, Ltd., Ronald Calvin Morgan, Whitney C. Buchanan, P.C., Whitney C. Buchanan, Albuquerque, NM, Feazel...
Case Date:June 27, 2008
Court:Supreme Court of New Mexico
 
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Page 1215

188 P.3d 1215 (N.M. 2008)

144 N.M. 464, 2008 -NMSC- 046

Robert FISER, individually, and as a representative of a class of persons within the State of New Mexico, Plaintiff-Petitioner,

v.

DELL COMPUTER CORPORATION, a/k/a Dell, Inc., Defendant-Respondent.

No. 30,424.

Supreme Court of New Mexico.

June 27, 2008

Page 1216

[Copyrighted Material Omitted]

Page 1217

Morgan Law Office, Ltd., Ronald Calvin Morgan, Whitney C. Buchanan, P.C., Whitney C. Buchanan, Albuquerque, NM, Feazell & Tighe, L.L.P., Austin Tighe, Austin, TX, for Petitioner.

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

Gary K. King, Attorney General, David K. Thomson, Assistant Attorney General, Nanette E. Erdman, Assistant Attorney General, Scott Fuqua, Assistant Attorney General, Santa Fe, NM, for Amicus Curiae Office of the Attorney General.

Feferman & Warren, Robert Dale Treinen, Albuquerque, NM, Amy Radon, F. Paul Bland, Jr., Washington, D.C., for Amicus Curiae Public Justice, P.C.

[144 N.M. 466] OPINION

SERNA, Justice.

{1} We granted certiorari to review whether Defendant Dell Computer Corporation's Motion to Stay and Compel Arbitration pursuant to the Federal Arbitration Act was properly granted. We hold that, in the context of small consumer claims that would be prohibitively costly to bring on an individual basis, contractual prohibitions on class relief are contrary to New Mexico's fundamental public policy of encouraging the resolution of small consumer claims and are therefore unenforceable in this state. We reverse.

I. FACTUAL BACKGROUND AND PROCEEDINGS BELOW

{2} Plaintiff Robert Fiser purchased a computer from Defendant via the company's website. He subsequently filed a putative class action lawsuit contending that Defendant systematically misrepresents the memory size of its computers. He alleges violations of the New Mexico Unfair Practices Act (UPA), NMSA 1978, Sections 57-12-1 to -26 (1967, as amended through 2003), the New Mexico False Advertising Act, NMSA 1978, Sections 57-15-1 to -10 (1965), the New Mexico Uniform Commercial Code (UCC), NMSA 1978, Sections 55-1-101 to -12-111 (1961, as amended), and common law concepts of breach of contract, breach of warranty, misrepresentation, violations of the covenants of good faith and fair dealing, bad faith, and unjust enrichment.

{3} Central to the issue presented is the scant amount of damages alleged: Plaintiff estimates that Defendant's alleged misrepresentation results in a monetary loss to its customers of just ten to twenty dollars per computer.

{4} Defendant filed a Motion to Stay and Compel Arbitration pursuant to the Federal Arbitration Act (FAA). See 9 U.S.C. §§ 3, 4 (2000). Defendant argued that, pursuant to the “terms and conditions" on its website at the time of the purchase, Plaintiff is required to individually arbitrate his claims and is precluded from proceeding on a classwide basis either in litigation or arbitration. The “terms and conditions" included an arbitration clause mandating that “any claim, dispute, or controversy ... against Dell ... [was subject to] binding arbitration administered by the National Arbitration Forum (NAF)." The terms also included a clause (hereinafter referred to as the class action ban) which directed that the arbitration was “limited solely to the dispute or controversy between [Plaintiff] and Dell." 1Finally, the

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[144 N.M. 467] “terms and conditions" contained a choice-of-law provision declaring Texas law to be controlling. Although the parties disagree over whether Plaintiff assented to Defendant's “terms and conditions," we do not reach that issue. We assume without deciding, for the purpose of our analysis, that he assented to the terms.

{5} The district court agreed with Defendant that Plaintiff was bound by the arbitration provision and thus granted Defendant's motion. The Court of Appeals affirmed. Fiser v. Dell, 2007 -NMCA- 087, ¶ 1, 142 N.M. 331, 165 P.3d 328. Plaintiff petitioned for a writ of certiorari; both the New Mexico Attorney General and Public Justice filed amicus briefs in support of Plaintiff. Because we conclude that the class action ban is contrary to fundamental New Mexico public policy, we reverse.

II. DISCUSSION

A. Application of Texas Law Would Violate New Mexico Public Policy

1. New Mexico Respects Choice-of-Law Provisions Unless Application of the Chosen Law Would Contravene New Mexico Public Policy

{6} The threshold question in determining the validity of the class action ban is which state's law must be applied to this potentially multi-state class action that was filed in New Mexico by a New Mexico resident against a defendant that maintains its principal place of business in Texas for damages relating to a contract that contains a choice-of-law clause directing that Texas law be applied.

{7} New Mexico respects party autonomy; the law to be applied to a particular dispute may be chosen by the parties through a contractual choice-of-law provision. Section 55-1-301(A); see also United Wholesale Liquor Co. v. Brown-Forman Distillers Corp., 108 N.M. 467, 470, 775 P.2d 233, 236 (1989). However, when application of the law chosen by the parties offends New Mexico public policy, our courts may decline to enforce the choice-of-law provision and apply New Mexico law instead. United Wholesale Liquor, 108 N.M. at 470, 775 P.2d at 236;Sandoval v. Valdez, 91 N.M. 705, 707, 580 P.2d 131, 133 (Ct.App.1978). New Mexico courts will not give effect to another state's laws where those laws would “violate some fundamental principle of justice." Reagan v. McGee Drilling Corp., 1997 -NMCA- 014, ¶ 9, 123 N.M. 68, 933 P.2d 867 (quoted authority omitted).

{8} Application of Texas law to the instant matter would likely require enforcing the class action ban. See AutoNation USA Corp. v. Leroy, 105 S.W.3d 190, 199-201 (Tex.App.2003) (contractual prohibition of class actions not fundamentally unfair or violative of public policy). Unless enforcement of the class action ban would run afoul of fundamental...

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