Fritz v. Fed. Warranty Serv. Corp.

• Decision Date: 01 February 2021
• Docket Number: CIVIL ACTION FILE NO. 1:20-CV-2210-MHC
• Court: U.S. District Court — Northern District of Georgia
• Parties: Andrew FRITZ, individually and on behalf of all others similarly situated, Plaintiff, v. FEDERAL WARRANTY SERVICE CORPORATION and Lowe's Home Centers, LLC, Defendants.

516 F.Supp.3d 1358

Andrew FRITZ, individually and on behalf of all others similarly situated, Plaintiff,

v.FEDERAL WARRANTY SERVICE CORPORATION and Lowe's Home Centers, LLC, Defendants.

CIVIL ACTION FILE NO. 1:20-CV-2210-MHC

United States District Court, N.D. Georgia, Atlanta Division.

Signed February 1, 2021

Bonner Charles Walsh, Pro Hac Vice, Walsh PLLC, Grangeville, ID, Robert W. Killorin, Faruqi & Faruqi, LLP, Atlanta, GA, Timothy J. Peter, Pro Hac Vice, Faruqi & Faruqi, LLP, Jenkintown, PA, for Plaintiff.

Brian P. Perryman, Pro Hac Vice, Frank G. Burt, Pro Hac Vice, Carlton Fields Jorden Burt, P.A., Washington, DC, Michael Scott French, Wargo & French LLP, Atlanta, GA, for Defendant Federal Warranty Service Corporation.

Brittany Nash, James Francis Bogan, III, Jeffrey H. Fisher, Stephanie Newton Bedard, Kilpatrick Townsend & Stockton, LLP, Atlanta, GA, for Defendant Lowe's Home Centers, LLC.

ORDER

MARK H. COHEN, United States District Judge This case comes before the Court on Defendant Federal Warranty Service Corporation ("Federal Warranty")’s Motion to Compel Arbitration and to Stay Action Pending Arbitration [Doc. 15], Federal Warranty's Motion to Dismiss [Doc. 16], and Defendant Lowe's Home Centers, LLC ("Lowe's")’s Motion to Stay Action Pending Arbitration [Doc. 20].

I. BACKGROUND

Plaintiff Andrew Fritz ("Fritz") purchased a barbeque grill from a Lowe's home improvement store on January 5, 2019, for $399.00. Compl. [Doc. 1] ¶ 20. While Fritz was checking out and attempting to pay, a Lowe's representative inquired as to if he wanted to purchase a four-year extended warranty protection plan ("Protection Plan") for the barbeque grill. Id.; see also Protection Plan [Doc. 16-2 at 9-48]. Fritz alleges that the Lowe's representative told Fritz that the Protection Plan "covers everything," including on-site repairs, and that Fritz would be "completely protected." Compl. ¶ 20. Fritz purchased the Protection Plan for $79.99 and the Lowe's representative placed a brochure regarding the Protection Plan in Mr. Fritz's shopping bag with his other items. Id. Fritz alleges that the terms and conditions of the Protection Plan, including the provision mandating arbitration, were contained in the brochure placed in his shopping bag at the time of purchase. Compl. ¶¶ 3, 20, 24; see also Decl. of Angie Huggins Breedlove ("Breedlove Decl.") (June 24, 2020) [Doc. 16-2] ¶¶ 13-14 (indicating that a brochure containing the terms and conditions of the Protection Plan are made available to customers prior to purchase and provided to customers after purchase).

The terms and conditions of the Protection Plan included the following clause mandating arbitration for any dispute between Fritz and Lowe's or Federal Warranty arising out of or related to the Protection Plan:

Any and all claims, disputes, or controversies of any nature whatsoever (whether in contract, tort or otherwise, including statutory, common law, fraud (whether by misrepresentation or by omission) or other intentional tort, property, or equitable claims) arising out of, relating to, or in connection with (1) this Plan or any prior Plan, and the purchase thereof; and (2) the validity, scope, interpretation, or enforceability of this PROVISION or of the entire Plan (collectively, a "Claim"), between You and Us shall be resolved by binding arbitration before a single arbitrator, except that either You or Us may bring a Claim in small claims court (where allowed by law).

Protection Plan at 24. The same provision stated that any arbitration "will be administered in keeping with the Consumer Arbitration Rules (or their functional equivalent) ("Rules") of the American Arbitration Association ("AAA") in effect when the Claim is filed." Id. This section also provided as follows:

Unless You and We agree, the arbitration will take place in the county and state where You live. The Federal Arbitration Act, 9 U.S.C. § 1 et seq., will govern and no state, local or other arbitration law will apply. YOU AGREE AND UNDERSTAND THAT this PROVISION means that You give up Your right to go to court on any claim covered by this PROVISION, except where You or Us decide to proceed in small claims court. You also agree that any arbitration proceeding or small claims court proceeding will only consider Your Claims. Claims by, or on behalf of, other individuals will not be arbitrated or litigated in any proceeding that is considering Your Claims.

Id. Additionally, the terms and conditions included a "free-look" period which permitted Fritz to reject and cancel the Protection Plan and get his money back if, after reviewing the terms and conditions, he did not want to accept them:

You may, within 20 days, reject and return this Plan. Upon return of the Plan within the applicable time period, if no claims have been made, You will be refunded the full Plan Price. A 10% penalty per month will be added to a refund that is not paid or credited within 30 days after the return of the Plan.

Id. at 28.

Fritz alleges that in November of 2019, he began to have problems with his barbeque grill and he contacted Lowe's requesting an on-site pick-up as he believed was covered under the Protection Plan. Compl. ¶ 20; see also Decl. of Angelia Sallee-Atchison (June 25, 2020) ("Sallee-Atchison Decl.") [Doc. 20-1] ¶ 14 (indicating that Lowe's business records reflect that Fritz made a claim under the Protection Plan on November 17, 2019). Fritz alleges that "Lowe's informed him that they would not honor the Protection Plan" because the barbeque grill was under a five-year parts warranty from the manufacturer, and that Lowe's would not perform an on-site pick-up of the grill. Compl. ¶ 20. However, Lowe's did offer to reimburse Mr. Fritz for the full cost of the grill plus sales tax (totaling $436.91). Sallee-Atchison Decl. ¶ 15. Fritz accepted the offer and on November 21, 2019, Lowe's fully reimbursed Fritz the $436.91. Id. ¶ 16.

II. LEGAL STANDARD

Under Supreme Court precedent, "whether parties have agreed to submit a particular dispute to arbitration is typically an issue for judicial determination." Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 296, 130 S.Ct. 2847, 177 L.Ed.2d 567 (2010) (internal punctuation and citation omitted); see also Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 68, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010). The Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. (2012), "reflects the fundamental principle that arbitration is a matter of contract." Id. Section 2 of the FAA provides:

A written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, 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 FAA thereby places arbitration agreements on an equal footing with other contracts and requires courts to enforce them according to their terms." Rent-A-Center, 561 U.S. at 67, 130 S.Ct. 2772 (citations omitted).

Parties may contract around the general rule and agree to submit questions of arbitrability to the arbitrator in the first instance. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) ; see also Terminix Int'l Co. v. Palmer Ranch Ltd. P'ship, 432 F.3d 1327, 1332-33 (11th Cir. 2005). For example, "when parties incorporate the rules of the [American Arbitration] Association into their contract, they ‘clearly and unmistakably’ agree[ ] that the arbitrator should decide whether the arbitration clause [applies]." U.S. Nutraceuticals, LLC v. Cyanotech Corp., 769 F.3d 1308, 1311 (11th Cir. 2014) (quoting Terminix, 432 F.3d at 1332 ). However, regardless of whether the parties have delegated arbitrability to the arbitrators, before a court can compel a party to arbitration, it must be satisfied that the parties actually agreed to arbitrate. AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 ("[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit."); see also Doe v. Princess Cruise Lines, Ltd., 657 F.3d 1204, 1214 (11th Cir. 2011) (quotation marks and citation omitted) ("Even though there is a presumption in favor of arbitration, the courts are not to twist the language of the contract to achieve a result which is favored by federal policy but contrary to the intent of the parties.").

The FAA "provisions manifest a liberal federal policy favoring arbitration agreements." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) (quotation omitted); see also Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987) (holding that the FAA's "federal policy favoring arbitration" requires that courts "rigorously enforce agreements to arbitrate."). Therefore, "questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration" and "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). Consequently, arbitration provisions are to be generously construed in favor of arbitration. Id. However, "while doubts concerning the scope of an arbitration clause should be resolved in favor of arbitration, the presumption does not apply to disputes concerning whether an agreement to arbitrate has been made." Bazemore v. Jefferson Capital Sys., LLC, 827 F.3d 1325, 1329 (11th Cir. 2016) (quoting Dasher v. RBC Bank (USA), 745 F.3d 1111, 1116 (11th Cir. 2014) (quotation marks and citation omitted)).

III. ANALYSIS

When a district court adjudicates a motion to compel arbitration under the FAA, it must engage in a two-step inquiry. Mitsubishi Motors Corp. v. Soler...