## Facts

- Thomas E. Walton and Le’Ellen Walton bought a mobile home manufactured by Southern Energy Homes, Inc. from Rose Mobile Homes L.L.C.
- Southern Energy provided a one-year written manufacturer’s warranty containing an arbitration clause requiring binding arbitration of warranty disputes.
- At the time of sale, Thomas Walton also signed a separate binding arbitration agreement.
- After purchase, the Waltons reported numerous defects and sought repairs from the seller and manufacturer; repairs did not resolve the problems to their satisfaction.
- The Waltons attempted to revoke acceptance of the home and later sued for negligence, breach of contract, breach of express and implied warranties, and a claim under the Magnuson–Moss Warranty Act (MMWA).
- The case proceeded in federal court; the district court compelled arbitration of state-law claims but refused to compel arbitration of the MMWA claim.

## Issues

1. Whether the MMWA or its FTC implementing regulations prohibit enforcement, under the Federal Arbitration Act (FAA), of a binding predispute arbitration agreement covering an MMWA warranty claim.

## Decision

- The Fifth Circuit reversed the denial of the motion to compel arbitration of the MMWA claim and remanded.
- The court held the MMWA does not contain a clear congressional command barring arbitration of MMWA claims.
- The court held FTC regulations governing MMWA “informal dispute settlement mechanisms” do not invalidate FAA-enforceable arbitration agreements.
- The court found no inherent conflict between arbitration and the purposes of the MMWA.
- Because the Waltons’ MMWA claim fell within the scope of the arbitration provisions, the manufacturer was entitled to compel arbitration of that claim.

## Legal Principles

- The FAA embodies a strong federal policy favoring enforcement of arbitration agreements; interpretive doubts about scope are resolved in favor of arbitration.
- A federal statute displaces the FAA only where Congress clearly indicates an intent to preclude arbitration, shown by statutory text, legislative history, or an inherent conflict with the statute’s purposes.
- FTC rules addressing nonbinding “informal dispute settlement mechanisms” established within written warranties do not, without a clear statutory basis, override FAA-enforceable agreements to arbitrate.
- MMWA warranty claims may be resolved through binding predispute arbitration when the agreement is otherwise enforceable and covers the dispute.

## Conclusion

The Fifth Circuit required arbitration of the consumers’ MMWA claim, reasoning that neither the MMWA nor FTC regulations clearly bar binding predispute arbitration and that arbitration is compatible with the statute’s remedial purposes when a valid FAA-governed agreement applies.


Walton v. Rose Mobile Homes L.L.C., 298 F.3d 470 (5th Cir. 2002)