In this paper, I am going to write about case Mance V. Mercedes- Benz USA. This case involves Plaintiff Demetrius Mance and Defendant Mercedes- Benz USA on whether the contract dispute contains an arbitration clause. In this essay, I will analyze the case, talk about the legal consequence, ethical consequence and conclusion.
During October 2008, Plaintiff Demetrius Mance, a California Resident, purchased a new Mercedes- Benz E350 in Sacramento, California. With Mr. Mance opposing the Mercedes-Benz’s motion arguing that the company is unable to show the court a sufficient connection to enforce the arbitration clause, and legal interest challenging the case by the defendant. In the contract, Mercedes- Benz assured to maintain the service of the vehicle. As the contract contains an arbitration clause, “it states that any disagreements between the parties will be resolved using arbitration and not by a court proceeding” (295). As the facts state, many contract disputes are evaluated by the court system, However, this case is arbitration of a contract dispute.
According the Business LAw textbook, “ Arbitration is a nonjudicial, private resolution of a contract dispute. An arbitrator, not a judge or jury, renders a decision in the case. Most arbitration agreements stipulate binding arbitration, that is, the arbitrator’s decision cannot be appealed to the court. Arbitration is assembled when the parties have enter an arbitration agreement” (294). This case is an example of an arbitration agreement due to Mercedes- Benz ordering Mr. Mance to arbitrate his claim because “to purchase the car, Mance signed a retail installment contract” (295). The U. S Congress has passed the Federal Arbitration Act, advocating the arbitration of contract disagreement whether it involves state or federal law. Also, it should be reasonable, final and enforceable for the revocation of the contract. When the court determined the transaction including the purchase/sales related to the arbitration agreement, falling under the Federal Arbitration Act. The court act was to find the disagreement within the contract and a valid arbitration agreement. If there are no issues, the court proceeds to arbitration with the agreement.
According to The Tenth Edition Business Law, “ The arbitration clause provides Mr. Mance with a choice of two common arbitration associations and allows him to suggest an alternative. Mr. Mance’s unconscionability argument fails” (295). Judge Beeler states, “The arbitration provision was highlighted, apparent, and not oppressive, and it should not have taken
Mr. Mance by surprise”. Under the FAA, Mercedes- Benz USA as a non- signatory to the contract can compel a signatory to arbitrate. For example, Mercedes can enforce an arbitration agreement having legal rights as a third party to proceed. Also, a signatory can do the opposite under an alternative law. There are two kinds of impartial laws that can possibly support a non-signatory right to enforce arbitration. First, when the signatory’s allegations against the non-
signatory appear on the contract. Second, when the non-signatory’s policy interferes with a signatory. Since Mr. Mance did not have any claims against the dealer, I believe the first estoppel applies. As a result, the dealers should be able to compel Mr. Mance to arbitrate his claim, “Mercedes- Benz warranted to preserve and maintain the utility and performance of the vehicle” (295). Mr. Mance claim infers the existence of the basic contract. Mercedes- Benz role to follow protocol with its warranty appeared when Mr. Mance purchased his vehicle from the dealer. If he was to not sign the contract, he would have warrantied with the car dealer. Overall, his claim for violation of warranty is assumed on the contract.
Similarly, the case Fred Dryer v. Los Angeles Rams. The agent of the signatory can compel the other signatory to arbitrate to wrongdoing for which a company is being sued or claims against an agent containing the arbitration clause.Dryer contains a binding arbitration, which is when an arbitrator’s decision cannot be appealed to the courts. In the event of a disagreement or application of any provision of the contract, the bargaining agreement sets up a procedure for general contract disputes. What the trial court found offensive was a clause in Article VII which provides that matters which are submitted as grievances and involve " the integrity or public trust in the game of professional football " may be revoked by the Commissioner from the Article VII procedure and process in terms of section VIII (commissioner discipline) after consultation with the committee. The NFL commissioner, who hears the dispute and any knowledge from his own observation. The NFL commissioner is paid by the members within the club by the management. After looking at the trial case, the defendant’s petition was denied to compel arbitration. Evaluating that the arbitration clause is a standard form contract,"a contract of adhesion is fully enforceable according to its terms" resulting in an unconscionable contract.
From my observation the advantages of the Arbitration of the contract disputes is its faster than the process of taking legal actions and able to choose an arbitrator with specialized knowledge/skills of that particular issue. The disadvantages are appeals are not allowed within an arbitration case, more expensive and not capable to sue.
Even though, Mr. Mance did not have the clause discussed with him, but it is hard to miss, “the arbitration clause was highlighted by bold, capitalized text. The arbitration clause provided for binding, non appealable arbitration” (295). However, Mr. Mance didn’t find the arbitration agreement convincing. The Mercedes-Benz Arbitration states:
“THE FOLLOWING ARBITRATION PROVISIONS SIGNIFICANTLY AFFECT YOUR RIGHTS IN ANY DISPUTE WITH US. PLEASE READ THE FOLLOWING DISCLOSURES AND THE ARBITRATION PROVISION THAT FOLLOWS CAREFULLY BEFORE YOU ACCESS ANY OTHER PART OF THIS SITE OR UTILIZE ANY OF THE SERVICES.
A. If either you or we choose, any dispute between you and us will be decided by arbitration and not in court.
B. If such dispute is arbitrated, you and we will give up the right to a trial by a court or a jury trial.
C. You agree to give up any right you may have to bring a class-action lawsuit or class arbitration, or to participate in either as a claimant, and you agree to give up any right you may have to consolidate your arbitration with the arbitration of others.
D. The information that can be obtained in discovery from each other or from third persons in arbitration is generally more limited than in a lawsuit.
E. Other rights that you and/or we would have in court may not be available in arbitration.”
Again, Mr. Mance failed to convince the court that the arbitration clause was oppressive or took him by surprise “ (295). So the U.S district court made the decision that the clause was enforceable and granted Mercedes- Benz’s motion to compel arbitration. In order for Mr. Mance to defeat Mercedes-Benz, the clause would have to be unconscionable. Which focuses on the harm of the existing terms of the contract. The court proved Mr. Mance did not have factual evidence, but because of both procedure and content. The court found the arbitration agreement was not unscionable. As stated before, Mr. Mance argument failed and the case is proven to be an arbitration clause.