Existence Versus Scope Of Arbitration Agreement -- See How It Makes A Difference.
Tire recapping. A service attendant points out a worn tire that may be recapped under a new plan which removes restrictions on reclaimed camelback rubber for passenger tires. The plan to recap passenger car tires with reclaimed rubber camelback, approved by rubber director William M. Jeffers, was put into effect in February 1943 to reduce the demand for replacement tires and still keep civilian cars in service. Library of Congress. Alfred T. Palmer, photographer. February, 1943.
A label can make a difference. Doubts concerning the scope of an arbitration agreement are generally resolved in favor of arbitration. That's the presumption in favor of arbitration at work. But that presumption does not apply when there are doubts as to the existence of an arbitration agreement. The panel deciding Kevin Johnson v. Walmart, Inc., 21-16423 (9th Cir. 1/10/23) (Sessions, Tashima, Paez), agreed that the issue concerned the existence of an arbitration agreement, rather than its scope, making their decision a bit easier, since application of the label "existence" rather than "scope" meant the panel did not have to deal with a presumption in favor of arbitration.
Kevin Johnson used a Walmart website that included an arbitration agreement to purchase tires. When he went to the store to have the tires installed, he purchased a lifetime tire balancing and rotation agreement. The in-store purchase did not come with an arbitration agreement. At some point, Walmart allegedly stopped balancing and rotating tires for Johnson, so he sued on behalf of a putative class. Despite broad language in the arbitration agreement that “. . . all disputes arising out of or related to these Terms of Use or any aspect of the relationship between you and Walmart . . . will be resolved through final and binding arbitration", the court held that the arbitration agreement did not apply to the in-store purchase.
Language introducing the arbitration provision stated: “These Terms of Use govern your access to and use of all Walmart Sites.” The court interpreted this to mean that the arbitration agreement did not apply to the in-store purchase. And since the opinion explained this was a question of the existence rather than the scope of an agreement, it did not need to deal with a presumption in favor of arbitrability.
So: two separate contracts, one with an arbitration agreement, one without, both contracts involving tires, both contracts involving the same parties, but one contract applying to Walmart [online] sites, and the other contract applying to in-store purchases. Conclusion: no arbitration agreement existed for the in-store purchase.
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