Provencher v. Dell, Inc.

• Citation: 409 F.Supp.2d 1196
• Decision Date: 03 January 2006
• Docket Number: NO. SA CV 05-878 CJC (ANx).,SA CV 05-878 CJC (ANx).
• Court: U.S. District Court — Central District of California
• Parties: Charles PROVENCHER, on behalf of himself and all others similarly situated, Plaintiff, v. DELL, INC., a corporation; BancTec, Inc., a corporation; Qualxserv LLC; Dell Catalog Sales, L.P., an entity; and Dell Products, L.P., an entity, Defendants.

409 F.Supp.2d 1196

Charles PROVENCHER, on behalf of himself and all others similarly situated, Plaintiff, v. DELL, INC., a corporation; BancTec, Inc., a corporation; Qualxserv LLC; Dell Catalog Sales, L.P., an entity; and Dell Products, L.P., an entity, Defendants.

NO. SA CV 05-878 CJC (ANx).

United States District Court, C.D. California, Southern Division.

January 3, 2006.

COPYRIGHT MATERIAL OMITTED

Brian R. Strange, Gretchen Carpenter, Strange and Carpenter, Randall S. Rothschild, Randall Rothschild Law Offices, Los Angeles, CA, for Plaintiff.

Jason Bergmann, Lawrence J. Gornick, Richard E. Elder, Paul Hastings Janofsky and Walker, San Francisco, CA, David M. Roberts, Steven F. Raspe, Roberts Raspe and Blanton, Aaron C. Gundzik, John W. Cotton, Cotton and Gundzik, Los Angeles, CA, for Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS

CARNEY, District Judge.

I. INTRODUCTION

Defendants Dell, Inc., Dell Catalog Sales, L.P., Dell Products, L.P., BancTec, Inc., and Qualxsery LLC (collectively "Dell") move to enforce their arbitration agreement with Plaintiff Charles Provencher and compel him to arbitrate his claims against them individually before the National Arbitration Forum ("NAF") instead of by way of this putative class action. Dell's motion to compel arbitration is GRANTED.¹ Mr. Provencher and Dell knowingly, voluntarily, and intelligently agreed to resolve their disputes through the NAF, which is without question an inexpensive, efficient, and convenient forum for resolving commercial disputes.

II. BACKGROUND

On November 15, 2001, Mr. Provencher purchased a Dell Dimension computer with related servicing from Dell. (Pape Decl., ¶ 6.) Mr. Provencher made his purchase over the Internet subject to certain terms and conditions that were explicitly set forth in a written contract entitled "Terms and Conditions Agreement" ("Agreement"). (Pape Decl., ¶ 4, Exh. A.)

The Agreement was a standard "approve-or-return" contract. If Mr. Provencher was not satisfied with his computer and the services that Dell rendered in connection therewith, or if he found any of the provisions of the Agreement unacceptable, he could return the computer to Dell within 30 days and cancel the Agreement. (Id., ¶¶ 8, 9.) The Agreement was available for Mr. Provencher's review on Dell's website before, while, and after he ordered the computer and related services from Dell. (Id., ¶¶ 5, 8.) Mr. Provencher also received two written copies of the Agreement: one inside the box containing his computer and the other on the back of the packaging slip which accompanied his computer. (Id., ¶¶ 6, 8.) In his own words, Mr. Provencher conceded that the "terms of my warranty were in writing and found in many places such as the pre-sale advertising, my invoice, and the documentation that came with the computer which included the so called service contract." (Provencher Decl., ¶ 4.)

The Agreement had two provisions particularly relevant to this lawsuit. The first was a choice-of-law provision providing for the application of Texas law with respect to any dispute between the parties, and the second was an arbitration provision providing for individual arbitration of disputes before the NAF and waiving Mr. Provencher's right to proceed by way of class action. (Id., Exh. A.) These two provisions were explicitly and conspicuously set forth in the Agreement. (Id.) Indeed, the Agreement contained the following preamble in capitalized, bolded, and underlined letters:

PLEASE READ THIS DOCUMENT CAREFULLY! IT CONTAINS VERY IMPORTANT INFORMATION ABOUT YOUR RIGHTS AND OBLIGATIONS, AS WELL AS LIMITATIONS AND EXCLUSIONS THAT MAY APPLY TO YOU. THIS DOCUMENT CONTAINS A DISPUTE RESOLUTION CLAUSE.

(Id. (emphasis in original).)

Paragraph 12 of the Agreement contained the arbitration provision at the heart of this dispute:

Binding Arbitration. ANY CLAIM, DISPUTE, OR CONTROVERSY ... AGAINST DELL, its agents, employees, successors, assigns or affiliates (collectively for purposes of this paragraph "Dell") arising from or relating to this Agreement, its interpretation, or the breach, termination or validity thereof, the relationships which result from this Agreement (including, to the full extent permitted by applicable law, relationships with third parties who are not signatories to this Agreement), Dell's advertising, or any related purchase SHALL BE RESOLVED EXCLUSIVELY AND FINALLY BY BINDING ARBITRATION ADMINISTERED BY THE NATIONAL ARBITRATION FORUM (NAF) ... The arbitration will be limited solely to the dispute or controversy between Customer and Dell ... PROVIDED, HOWEVER, THAT THIS BINDING ARBITRATION REQUIREMENT DOES NOT APPLY TO CLAIMS AGAINST DELL ARISING UNDER THE APPLICABLE WRITTEN WARRANTY. SUCH CLAIMS MAY BE PURSUED IN ANY COURT OF COMPETENT JURISDICTION. [sic]

(Id. (emphasis in original).)

Apparently, Mr. Provencher was not satisfied with his computer and the services rendered by Dell. Interestingly enough, however, Mr. Provencher never exercised his right under the Agreement to return the computer and rescind the transaction. Nor did Mr. Provencher ever file a claim with the NAF in accordance with the Agreement. Indeed, Dell was not aware of any problem with Mr. Provencher's computer or the services that it rendered until August of 2005, when Mr. Provencher filed this nationwide class action.² In his thirty-four page First Amended Complaint ("Complaint"), Mr. Provencher alleges that Dell breached its contractual and legal obligations to him and every other person in the entire United States who purchased a computer and related services from Dell in essentially six ways: (1) Defendants did not provide "next business day at-home" warranty repair service with a live technician to repair or replace defective computer systems under warranty even though they promised to do so; (2) Defendants did not provide "next business day" warranty replacement parts even though they promised to do so; (3) Defendants did not provide on site warranty service to fix computer problems unless a replacement part was needed even though they promised to do so; (4) Defendants did not provide warranty repair or replacement part service one business day after they received a broken notebook computer system by mail even though they promised to do so; (5) Defendants did not provide top quality, new replacement parts and components to fulfill their warranty obligations as promised but instead used recycled, used, or inferior parts and components; and (6) Defendants, as a business practice, overcharged customers for replacement parts. (Complaint, ¶ 2.) Mr. Provencher's Complaint alleges ten separate causes of action for breach of warranty, breach of contract, violation of a federal consumer protection statute, deceptive and unfair practices under state consumer protection law, fraud, and unjust enrichment. Mr. Provencher seeks on behalf of himself and the nationwide class millions of dollars in compensatory and punitive damages, as well as attorneys' fees. (Complaint, pp. 33-34.) Instead of filing an answer to Mr. Provencher's Complaint, Dell promptly filed this motion to compel him to arbitrate his claims individually with Dell before the NAF in accordance with the terms and conditions of the Agreement.

III. ANALYSIS

This motion concerns the enforceability of the parties' agreement to arbitrate their disputes before the NAF and to waive Mr. Provencher's right to proceed by way of a nationwide class action. When addressing this issue, the Court is mindful of Congress' recent finding that there have been abuses of the class action device over the past decade that have adversely affected interstate commerce and unfairly punished responsible companies and businesses.³ Class Action Fairness Act of 2005, Pub.L. No. 109-2, § 2, 119 Stat. 4 (2005). It was because of those abuses that Congress specifically enacted the Class Action Fairness Act and shifted many class actions to federal court.⁴ Id.

The Court is also very mindful of Congress' directive to reverse the long standing judicial hostility to arbitration agreements "and to place arbitration agreements upon the same footing as other contracts." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). The Federal Arbitration Act ("FAA") enacted by Congress establishes a liberal policy favoring arbitration agreements and requires courts to rigorously enforce private arbitration agreements according to their terms. Volt Info. Scis., Inc. v. Bd. of Trustees, 489 U.S. 468, 479, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989). Only in those limited circumstances where the arbitration agreement at issue is unenforceable on a ground that exists at law or equity for any contract, such as fraud, duress, or unconscionability, can a court strike down an arbitration agreement. Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996); see also Ticknor v. Choice Hotels Int'l, Inc., 265 F.3d 931, 936-37 (9th Cir.2001), cert. denied, 534 U.S. 1133, 122 S.Ct. 1075, 151 L.Ed.2d 977 (2002). With proper deference to these Congressional findings and directives, the Court now turns to the issue of the enforceability of the parties' arbitration provision and class action waiver.

A. Texas Law Governs This Dispute

The Court must first determine the appropriate state law that governs the issue of whether the parties' arbitration provision and class action waiver are enforceable. The parties' Agreement provides for Texas law to govern that issue.⁵ (Pape Decl., Exh. A.) The parties agree that under California choice of law rules, their choice of Texas law must be respected unless the Court finds that enforcing Texas law would violate a fundamental policy of California.⁶ Discover Bank v. Superior Court, 36 Cal.4th 148, 173-74, 30 Cal. Rptr.3d 76, 113 P.3d 1100 (2005); see also Ticknor, 265 F.3d at 937 ("Federal Courts sitting in diversity look...