Abela v. General Motors Corp.

                                                                    Michigan Supreme Court 

                                                                    Lansing, Michigan 48909 


                                         Chief Justice                 Justices




Opinion
                                         Maura D. Corrigan             Michael F. Cavanagh
                                                                       Elizabeth A. Weaver
                                                                       Marilyn Kelly
                                                                       Clifford W. Taylor
                                                                       Robert P. Young, Jr.
                                                                       Stephen J. Markman




                                                                   FILED APRIL 7, 2004 



 JOHN and BARBARA ABELA,

        Plaintiffs-Appellants,

 v                                                                     No. 124375

 GENERAL MOTORS CORPORATION,

        Defendant-Appellee.

 _______________________________

 MEMORANDUM OPINION
        This    case   poses    the   question           whether     the      federal

 consumer product warranty act prohibits enforcement of a

 binding arbitration agreement entered into by a person who

 purchases a vehicle under a motor vehicle manufacturer’s

 employee purchase plan.         The trial court ruled that such a

 binding arbitration agreement is prohibited by the federal

 act.     The    Court   of    Appeals      reversed         the   trial      court’s

 decision, relying on the supposedly binding authority of

 the decisions of two federal circuit courts of appeals.                            We

 affirm the decision of the Court of Appeals, but do so
because we are persuaded by the reasoning employed in the

federal decisions and not because we are bound by them.

        Plaintiff John Abela purchased a 1999 Chevrolet truck

from a General Motors dealership under defendant’s employee

purchase plan, which offered him a discount because of his

wife’s employment with General Motors.                    As part of the

purchase       contract,     plaintiff      was    required   to   sign    an

agreement requiring any warranty dispute to be settled by

binding arbitration.              The truck subsequently developed a

number        of    problems,       necessitating        costly    repairs.

Plaintiff and his wife brought suit under the Magnuson-Moss

Warranty-Federal Trade Commission Improvement Act (MMWA),

15 USC 2301 et seq., as well as two Michigan statutes.1

Defendant responded with a motion for summary disposition

pursuant to MCR 2.116(C)(7), claiming that plaintiffs had

agreed to arbitrate any claims they had against defendant.

        The trial court denied defendant’s motion and granted

summary disposition in favor of plaintiffs pursuant to MCR

2.116(C)(9), for failing to state a valid defense.                         The

trial       court   based   its    ruling   on    the   determination     that




        1
       The two statutes are not relevant to this discussion.
As the Court of Appeals correctly ruled in this case, the
Michigan warranties on new motor vehicles act, the “lemon
law,” MCL 257.1401 et seq., and the Michigan Consumer
Protection Act, MCL 445.901 et seq., are surmounted by the
federal arbitration act.
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defendant’s program for binding arbitration was contrary to

the MMWA and, therefore, unenforceable.

     The Court of Appeals reversed the ruling of the trial

court.    257 Mich App 513; 669 NW2d 271 (2003).          It noted

that two federal circuit courts of appeals had addressed

the question whether the MMWA bars compulsory arbitration

of written warranty claims, and that both had determined

that the MMWA does not preclude such arbitration, otherwise

enforceable under the Federal Arbitration Act (FAA), 9 USC

1 et seq.    Citing Schueler v Weintrob, 360 Mich 621; 105

NW2d 42 (1960), and Woodman v Miesel Sysco Food Co, 254

Mich App 159; 657 NW2d 122 (2002), the Court of Appeals

held that it is bound by the authoritative holdings of the

federal courts of appeals on a federal question where there

is no conflict among those federal courts on that question.

Because the only two federal circuit courts of appeals that

had ruled on the issue concluded that binding arbitration

agreements are not prohibited by the MMWA, the Court of

Appeals found that the trial court had erred in granting

plaintiffs’ motion for summary disposition and in denying

defendant’s motion for summary disposition.

     We   disagree   with   the   Court   of   Appeals   basis   for

reversing the decision of the trial court. The Court of

Appeals concluded that it was bound by the decisions of the

federal circuit courts of appeals on questions of federal
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law.     257 Mich App 523.           Although     state courts are bound

by     the   decisions    of    the     United     States     Supreme    Court

construing federal law, Chesapeake & O R Co v Martin, 283

US 209, 220-221; 51 S Ct 453; 75 L Ed 983 (1931), there is

no   similar    obligation      with    respect     to   decisions      of   the

lower federal courts.               Winget v Grand Trunk W R Co, 210

Mich 100, 117; 177 NW2d 273 (1920).                See generally 21 CJS,

Courts, § 159, pp 195-197; 20 Am Jur 2d, Courts, § 171, pp

454-455.        The   Court    of    Appeals     reliance     on   Schueler    v

Weintrob, 360 Mich 621; 105 NW2d 42 (1960), is misplaced.

In that case, we were faced with conflicting decisions of

lower federal courts and, of course, were “free to choose

the view which seems most appropriate to us.” 360 Mich 634.

However, that statement does not establish the converse—

that    where   there    is    no    such    conflict,   we    are   bound    to

follow the decisions of even a single lower federal court.

Although lower federal court decisions may be persuasive,

they are not binding on state courts.

       Although the federal courts of appeals decisions are

not binding, we nevertheless affirm the decision of the

Court of Appeals.        We have examined the decisions in Walton

v Rose Mobile Homes LLC, 298 F3d 470 (CA 5, 2002), and

Davis v Southern Energy Homes, Inc, 305 F3d 1268 (CA 11,

2002), and find their analyses and conclusions persuasive.

Both decisions carefully examined the MMWA and the FAA, and
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both concluded that the text, the legislative history, and

the purpose of the MMWA did not evidence a congressional

intent       under     the    FAA     to     bar     agreements       for   binding

arbitration of claims covered by the MMWA.                            Persuaded by

these       analyses    of    the     federal        courts     of    appeals,   we

conclude       that    plaintiffs’          agreement        with    defendant   to

address      the     warranty       claim        through    defendant’s     dispute

resolution      process,       including          mandatory     arbitration,     is

enforceable.

        The Court of Appeals result is affirmed on the basis

of the above analysis, and this matter is remanded to the

trial court for entry of an order for binding arbitration

pursuant to the agreement.

                                            Maura D. Corrigan
                                            Elizabeth A. Weaver
                                            Clifford W. Taylor
                                            Robert P. Young, Jr.
                                            Stephen J. Markman


CAVANAGH, J.

        I   would     not    dispose       of     this     matter    by   memorandum

opinion.       I would grant leave to consider further briefing

and argument.

                                            Michael F. Cavanagh
                                            Marilyn Kelly




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