In Week1,you learned about arbitration. Read Case 16.3 in your textbook. Research the full opinion on this case. This case deals with the arbitration of contract disputes in breaches of contracts.

• What facts/ideas justify the opinion of the court in this case?
• What alternatives could you suggest to eliminate the issues in these cases?
• Research another case using an arbitration clause to deal with a breach of contract.
• Is use of arbitration clauses ethical? Why or why not? Support your opinion with at least two ethical theories.

Case 16.3 FEDERAL COURT CASE Arbitration of a Contract Dispute

Mance v. Mercedes-Benz USA

901 F.Supp.2d 1147, 2012 U.S. Dist. Lexis 140778 (2012) United States District Court for the Northern District of California

"The arbitration provision was highlighted, apparent, and not oppressive, and it should not have taken Mr. Mance by surprise."

Beeler, Judge

Facts

Demetrius Mance purchased a new Mercedes-Benz E350 automobile from a Mercedes-Benz dealer in Sacramento, California. The automobile was distributed by Mercedes-Benz USA. To purchase the car, Mance signed a retail installment contract. In the contract, Mercedes-Benz warranted to preserve and maintain the utility and performance of the vehicle. The contract contained an arbitration clause that states that any claim or dispute between the parties will be decided by arbitration and not by a court proceeding. The arbitration clause was highlighted by bold, capitalized text. The arbitration clause provided for binding, nonappealable arbitration.

Mance experienced numerous problems with the automobile, but Mercedes-Benz has not repaired the car satisfactorily according to Mance. Mance filed this lawsuit in U.S. district court against Mercedes-Benz for breach of express and implied warranties, alleging that the arbitration clause was unconscionable. Mercedes-Benz made a motion for an order compelling Mance to arbitrate his claims.

Issue

Is the arbitration clause enforceable?

Language of the Court

The arbitration provision was highlighted, apparent, and not oppressive, and it should not have taken Mr. Mance by surprise. He argues that the binding arbitration would leave him with limited appeal rights, but conclusiveness is one of the primary purposes of arbitration. 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.

Decision

The U.S. district court held that the arbitration clause was enforceable and granted Mercedes-Benz's motion to compel arbitration.