Magnuson-Moss Warranty Act Arbitration
In 1974, Congress passed the Magnuson-Moss Act "to improve the adequacy of information available to consumers, and prevent deception." 15 U.S.C.A. 2302(a) (2000).
The Act sets out specific requirements regarding disclosures, duties and remedies associated with warranties on consumer products.
Under the Act, any consumer who is damaged by a warrantor's failure to comply with an obligation under a written or implied warranty or service contract may "bring suit for damages and other legal and equitable relief." 15 U.S.C.A. 2310(d)(1) (2000).
Congress passed the Federal Arbitration Act FAA in 1925.
The FAA 's "primary purpose" is to ensure "that private agreements to arbitrate are enforced according to their terms." Volt Info. Sciences, Inc. v. Board of Trustees, 489 U.S. 468, 479, 103 L. Ed. 2d 488, 109 S. Ct. 1248 (1989); Solis v. Evins, 951 S.W.2d 44, 48 (Tex. App.--Corpus Christi 1997, writ denied).
The U.S. Supreme Court has stated, however, that "like any statutory directive, the FAA's mandate may be overridden by a contrary congressional command." Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 226, 96 L. Ed. 2d 185, 107 S. Ct. 2332 (1987).
The burden is on the party opposing arbitration to show that Congress intended to preclude a waiver of judicial remedies for the statutory rights at issue. Id. at 227.
Such Congressional intent can be gleaned from the statute's text or legislative history, or from an inherent conflict between the FAA's endorsement of arbitration and the statute's underlying purposes. Id.
The McMahon test for determining whether to enforce arbitration agreements involving statutory claims has been stated as follows:
. . . for a statutory claim to not be arbitrable, the party opposing arbitration must demonstrate that Congress intended to prohibit or limit waiver of the judicial forum. If the party is unable to do so, then it must demonstrate that an "inherent conflict" exists between the FAA and the statute's underlying purposes. Knepp v. Credit Acceptance Corp. (In re Knepp), 229 B.R. 821, 833 (Bankr. N.D. Ala. 1999).