Klocek v. Gateway, Inc.

• Decision Date: 15 June 2000
• Docket Number: No. CIV. A. 99-2499-KHV.,CIV. A. 99-2499-KHV.
• Citation: 104 F.Supp.2d 1332
• Parties: William S. KLOCEK, Plaintiff, v. GATEWAY, INC., et al., Defendants.
• Court: U.S. District Court — District of Kansas

Page 1332

104 F.Supp.2d 1332

William S. KLOCEK, Plaintiff, v. GATEWAY, INC., et al., Defendants.

No. CIV. A. 99-2499-KHV.

United States District Court, D. Kansas.

June 15, 2000.

COPYRIGHT MATERIAL OMITTED

William S. Klocek, Parkville, MO, pro se.

R. Lawrence Ward, Richard M. Paul, III, Jamee Maurer Klein, Shughart, Thomson & Kilroy, P.C., Kansas City, MO, for Gateway, Inc.

Samuel P. Logan, James K. Logan, Logan Law Firm LLC, Olathe, KS, for Hewlett-Packard, Inc.

MEMORANDUM AND ORDER

VRATIL, District Judge.

William S. Klocek brings suit against Gateway, Inc. and Hewlett-Packard, Inc. on claims arising from purchases of a Gateway computer and a Hewlett-Packard scanner. This matter comes before the Court on the Motion to Dismiss (Doc. # 6) which Gateway filed November 22, 1999 and Defendant Hewlett-Packard, Inc.'s Motion To Dismiss, Or In The Alternative For Stay Of Proceedings (Doc. # 16) filed December 22, 1999, the Motion (Doc. # 2) to certify a class which plaintiff filed October 29, 1999, the Motion For Sanctions, Expenses and Punitives [sic] (Doc. # 11) which plaintiff filed December 3, 1999, the Motion for a Writ of Certiorari (Doc. # 12) which plaintiff filed December 6, 1999, and the Motion for Verification (Doc. # 24) which plaintiff filed January 25, 2000. For reasons stated below, the Court overrules Gateway's motion to dismiss, sustains Hewlett-Packard's motion to dismiss, and overrules the motions filed by plaintiff.

A. Gateway's Motion to Dismiss

Plaintiff brings individual and class action claims against Gateway, alleging that it induced him and other consumers to purchase computers and special support packages by making false promises of technical support. Complaint, ¶¶ 3 and 4. Individually, plaintiff also claims breach of contract and breach of warranty, in that Gateway breached certain warranties that its computer would be compatible with standard peripherals and standard internet services. Complaint, ¶¶ 2, 5, and 6.

Gateway asserts that plaintiff must arbitrate his claims under Gateway's Standard Terms and Conditions Agreement ("Standard Terms"). Whenever it sells a computer, Gateway includes a copy of the Standard Terms in the box which contains the computer battery power cables and instruction manuals. At the top of the first page, the Standard Terms include the following notice:

NOTE TO THE CUSTOMER:

This document contains Gateway 2000's Standard Terms and Conditions. By keeping your Gateway 2000 computer system beyond five (5) days after the date of delivery, you accept these Terms and Conditions.

The notice is in emphasized type and is located inside a printed box which sets it apart from other provisions of the document. The Standard Terms are four pages long and contain 16 numbered paragraphs. Paragraph 10 provides the following arbitration clause:

DISPUTE RESOLUTION. Any dispute or controversy arising out of or relating to this Agreement or its interpretation shall be settled exclusively and finally by arbitration. The arbitration shall be conducted in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce. The arbitration shall be conducted in Chicago, Illinois, U.S.A. before a sole arbitrator. Any award rendered in any such arbitration proceeding shall be final and binding on each of the parties, and judgment may be entered thereon in a court of competent jurisdiction.¹

Gateway urges the Court to dismiss plaintiff's claims under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. The FAA ensures that written arbitration agreements in maritime transactions and transactions involving interstate commerce are "valid, irrevocable, and enforceable." 9 U.S.C. § 2.² Federal policy favors arbitration agreements and requires that we "rigorously enforce" them. Shearson/American Exp., Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987) (quoting Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S.Ct. 1238, 84 L.Ed.2d 158, (1985)); Moses, 460 U.S. at 24, 103 S.Ct. 927. "[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses, 460 U.S. at 24-25, 103 S.Ct. 927.

FAA Section 3 states:

If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.

9 U.S.C. § 3. Although the FAA does not expressly provide for dismissal, the Tenth Circuit has affirmed dismissal where the applicant did not request a stay. See Armijo v. Prudential Ins. Co. of Am., 72 F.3d 793, 797 (10th Cir.1995). Here, neither Gateway nor plaintiff requests a stay. Accordingly, the Court concludes that dismissal is appropriate if plaintiff's claims are arbitrable.³ Accord Fedmet Corp. v M/V BUYALYK, 194 F.3d 674, 678 (5th Cir.1999) (dismissal appropriate if all issues raised before court are arbitrable); Sparling v. Hoffman Constr. Co., 864 F.2d 635, 638 (9th Cir.1988); (district court had discretion to dismiss arbitrable claims); see also Black & Veatch Int'l Co. v. Wartsila NSD North Am., Inc., 1998 WL 953966, Case No. 97-2556-GTV (D.Kan. Dec. 17, 1998) (dismissing case and compelling arbitration).

Gateway bears an initial summary-judgment-like burden of establishing that it is entitled to arbitration. See, e.g., Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 n.9 (3d Cir.1980) (standard on motion to compel arbitration is same as summary judgment standard); Doctor's Assoc., Inc. v. Distajo, 944 F.Supp. 1010, 1014 (D.Conn.1996), aff'd, 107 F.3d 126 (2d Cir.1997) (same); Dougherty v. Mieczkowski, 661 F.Supp. 267, 270 n. 1 (D.Del.1987). Thus, Gateway must present evidence sufficient to demonstrate the existence of an enforceable agreement to arbitrate. See, e.g., Oppenheimer & Co. v. Neidhardt, 56 F.3d 352, 358 (2d Cir. 1995). If Gateway makes such a showing, the burden shifts to plaintiff to submit evidence demonstrating a genuine issue for trial. Id.; see also Naddy v. Piper Jaffray, Inc., 88 Wash.App. 1033, 1997 WL 749261, *2, Case Nos. 15431-9-III, 15681-8-III (Wash.App. Dec.4, 1997). In this case, Gateway fails to present evidence establishing the most basic facts regarding the transaction. The gaping holes in the evidentiary record preclude the Court from determining what state law controls the formation of the contract in this case and, consequently, prevent the Court from agreeing that Gateway's motion is well taken.

Before granting a stay or dismissing a case pending arbitration, the Court must determine that the parties have a written agreement to arbitrate. See 9 U.S.C. §§ 3 and 4; Avedon Engineering, Inc. v. Seatex, 126 F.3d 1279, 1283 (10th Cir.1997). When deciding whether the parties have agreed to arbitrate, the Court applies ordinary state law principles that govern the formation of contracts. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). The existence of an arbitration agreement "is simply a matter of contract between the parties; [arbitration] is a way to resolve those disputes — but only those disputes — that the parties have agreed to submit to arbitration." Avedon, 126 F.3d at 1283 (quoting Kaplan, 514 U.S. at 943-945, 115 S.Ct. 1920). If the parties dispute making an arbitration agreement, a jury trial on the existence of an agreement is warranted if the record reveals genuine issues of material fact regarding the parties' agreement. See Avedon, 126 F.3d at 1283.

Before evaluating whether the parties agreed to arbitrate, the Court must determine what state law controls the formation of the contract in this case. See id. at 1284. In diversity actions, the Court applies the substantive law, including choice of law rules, that Kansas state courts would apply. See Moore v. Subaru of Am., 891 F.2d 1445, 1448 (10th Cir. 1989). Kansas courts apply the doctrine of lex loci contractus, which requires that the Court interpret the contract according to the law of the state in which the parties performed the last act necessary to form the contract. See Missouri Pac. R.R. Co. v. Kansas Gas and Elec. Co., 862 F.2d 796, 798 n. 1 (10th Cir.1988) (citing Simms v. Metropolitan Life Ins. Co., 9 Kan.App.2d 640, 642-43, 685 P.2d 321 (1984)).

The parties do not address the choice of law issue, and the record is unclear where they performed the last act necessary to complete the contract. Gateway presents affidavit testimony that it shipped a computer to plaintiff on or about August 31, 1997, Affidavit of David Blackwell, ¶ 5 (attached to Memorandum in Support of Motion to Dismiss (Doc. # 8)), but it provides no details regarding the transaction. Plaintiff's complaint alleges that plaintiff lives in Missouri and, if Gateway shipped his computer, it presumably shipped it to Missouri. See Complaint, p. 1 (Doc. # 1). In his response to Gateway's motion, however, plaintiff states that on August 27, 1997 he purchased the computer in person at the Gateway store in Overland Park, Kansas, and took it with him at that time. Response to Motion to Dismiss, ¶¶ 2(b) and 2(d) (Doc. # 9). Depending on which factual version is correct, it appears that the parties may have performed the last act necessary to form the contract in Kansas (with plaintiff purchasing the computer in Kansas), Missouri (with Gateway shipping the computer to plaintiff in Missouri), or some unidentified other states (with Gateway agreeing to ship plaintiff's catalog order and/or Gateway actually shipping the order).⁴

The Court discerns no material...