- Arbitration on a Hot Shingled Roof: Homeowners Bound by Arbitration Agreement Printed on Shingle Wrapping
- November 16, 2018
Homeowners are bound by a mandatory-arbitration provision printed conspicuously on the wrapping around packages of shingles when the packages are opened and installed by the homeowners’ roofers, as a matter of Florida contract law. Dye v. Tamko Building Products, Inc., 2018 WL 5729085 (11th Cir. Nov. 2, 2018).
Two Florida homeowners whose roofers had purchased, opened, and installed Tamko shingles on the homeowners’ roofs brought an action against Tamko in federal court, asserting various claims based on the shingles’ alleged failure to meet industry standards and building codes. Tamko filed a motion to compel arbitration and dismiss the case, claiming that the homeowners were bound to arbitrate their claims based on the arbitration agreement printed on the packages of Tamko shingles opened and installed by the roofers.
The full arbitration agreement had been printed on the wrapping in capital letters, under the headings “IMPORTANT” and “READ CAREFULLY BEFORE OPENING BUNDLE.” The agreement provided for mandatory binding arbitration of “every claim, controversy, or dispute of any kind whatsoever . . . between you and Tamko . . . relating to or arising out of the product,” and that “any action brought . . . against Tamko will be arbitrated . . . individually and you will not consolidate, or seek class treatment for, any action unless previously agreed to in writing by both Tamko and you.” The agreement also required consumers to notify Tamko within 30 days following the discovery of a potential problem with the shingles.
Tamko argued that the homeowners accepted the arbitration agreement by opening and installing the shingles. The district court agreed, concluding that the roofers who opened the bundles had been hired by the homeowners to buy and install the shingles and had, on the homeowners’ behalf, accepted the agreement. The district court granted the motion to compel arbitration and to dismiss the case.
The Eleventh Circuit affirmed, in an opinion written by Judge Newsom and joined by Judges Tjoflat and Marcus. The court cited Florida law to the effect that a vendor may invite acceptance of an offer by conduct, and noted that the Eleventh Circuit has previously applied Florida law to hold that a vendor may specify that unwrapping a product constitutes acceptance. The issue before it, the court noted, “is cut from the same cloth. . . . As in the shrinkwrap cases, Tamko’s packaging provided conspicuous notice of its offer—something a reasonable, objective person would understand as an invitation to contract.” The plaintiffs argued that the difference between a bundle of shingles and a software application required a different result, but the court disagreed; consumers “in the age of Amazon Prime” should expect that vendors (with whom buyers frequently have no personal contact), whatever they are selling, “will often employ a ‘simple approve-or-return’ model, enclosing their full legal terms with a product at shipment.” Here, “Tamko made a valid offer in accordance with Florida law. As master of that offer, Tamko was free to invite acceptance by specified conduct, and it did—inviting consumers to accept by opening the shingles and retaining them for more than 30 days.” Opening and retaining the shingles constituted acceptance of that offer.The fact that the roofers and not the homeowners opened the packages of shingles did not change the result. Under Florida law, a grant of agency authority for a specific purpose—here, the purchase and installation of shingles—includes the authority to do things that are “incidental to it, usually accompany it, or are reasonably necessary to accomplish it.” The authority to accept Tamko’s purchase terms, the court held, was within the roofers’ authority to purchase and install shingles for the homeowners, and their conduct bound the homeowners to Tamko’s terms, including the arbitration agreement.