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STATE OF MICHIGAN

IN THE COURT OF APPEALS

PLAINTIFF’S OPPOSITION TO GENERAL MOTORS’  
APPLICATION FOR LEAVE TO APPEAL  

TABLE OF CONTENTS

INDEX OF AUTHORITIES iii

STATEMENT OF JURISDICTION vi

COUNTER STATEMENT OF QUESTIONS PRESENTED vii

INTRODUCTION AND SUMMARY OF ARGUMENT 1

COUNTER STATEMENT OF FACTS 4

STANDARD OF REVIEW 9

ARGUMENT 9

I. THE TRIAL COURT CORRECTLY HELD THAT CLAIMS FOR BREACH OF EXPRESS WARRANTY UNDER MMWA MAY NOT BE FORCED INTO BINDING ARBITRATION. 9

A. The Text And Legislative History Of MMWA Act Make Clear That
Claims For Breach Of Express Warranty Under The Act May Not
Be Forced Into Binding Arbitration. 10 

B. The Overwhelming Weight Of Judicial Authority Holds That Claims For Breach Of Express Warranty Under The MMWA May Not Be Forced Into Binding Arbitration. 12 

C. The Federal Agency Charged with Interpreting The MMWA Has Concluded That Claims For Breach Of Express Warranty Under The Act May Not Be Forced Into Binding Arbitration. 13

D. None Of The Authorities Cited By GM Persuasively Refute The Text, Legislative History, Case Law And Agency Interpretation Set Forth Above. 14 

E. GM’s Violation Is Not Excused By The Claim That Its Arbitration Clause Is "Formal." 16 

II. THE TRIAL COURT CORRECTLY RULED THAT GM’S ARBITRATION CLAUSE IS ILLEGAL UNDER THE LEMON LAW. 18 

A. GM’s Original And Current Arbitration Clauses Both Illegally Require GM  Employee/Consumers To Waive A Number Of Rights And Remedies Guaranteed Under The Lemon Law. 18 

B. It Is Illegal For GM’s Arbitration Clause To Deny Consumers Statutory Rights Protected By The Lemon Law. 20 

C. The Anti-Waiver Provisions And Substantive Provisions Of The Lemon Law Are Not Preempted By The FAA. 21

D. The Illegality Of The Contract Is Not Excused By The Fact That Plaintiff Voluntarily Entered The Agreement. 22 

E. The Trial Court Correctly Held That GM’s Original Arbitration Clause Was Illegal, Notwithstanding GM’s Eleventh Hour Effort To Cure It. 23

CONCLUSION 25

INDEX OF AUTHORITIES

CASES

 Al-Site Corp v. VSI Intern., Inc., 842 F. Supp. 507 (S.D. Fla. 1993) 15

 Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945) 14

 Boyd v. Homes of Legend, 981 F. Supp. 1423 (M.D. Ala. 1997) 13

 City of Mesquite v. Alladin’s Castle, Inc., 455 U.S. at 289 (1982) 24

 Cole v. Burns Int’l Security Servs., 105 F.3d 1465 (D.C. Cir. 1997) 20

 Compton v. Lepak, 154 Mich. App. 360 (1986) 23

 DeGaetano v. Smith Barney, Inc., 983 F. Supp. 459 (S.D.N.Y. 1997) 21

 Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681 (1996) 21

 Floss v. Ryan’s Family Steak Houses, Inc., 211 F.3d 306 (6^th Cir. 2000) 20

 Friends of the Earth, Inc. v. Laidlaw, 528 U.S. 167, 120 S.Ct. 693 (2000) 24

 Graham Oil Co. v. ARCO Products Co., 43 F.3d 1244 (9^th Cir. 1994) 20, 21

 HCSC-Laundry v. United States, 450 U.S. 1 (1981) 10

 In re Columbia Gas Systems, 997 F.2d 1039 (3^rd Cir. 1993) 15

 In re: Van Blarcum, 19 S.W.3d 484 (Tex. Ct. App. 2000) 13

 Jordan v. Transnational Motors, Inc., 212 Mich App 94 (1995) 19

 LaChance v. Northeast Publishing, Inc., 965 F. Supp. 177 (D. Mass. 1997) 21

 Martens v. Smith Barney, Inc., 181 F.R.D. 243 (S.D.N.Y. 1998) 21

 Olmstead v. L.C. Ex Rel. Zimring, 527 U.S. 581 (1999) 14

 Paladino v. Avnet Computer Tech., Inc., 134 F.3d 1054 (11^th Cir. 1998) 20

 Paul v Lee, 455 Mich 204, 210 (1997) 9

Prudential Ins. Co. of America v. Goodman, 895 F. Supp. 137 (S.D. Tex. 1995) 15 

Raesly v. Grand Housing, Inc., 105 F. Supp. 2d 562 (S.D. Miss. 2000) 13

 Rembert v. Ryan’s Steak House, 235 Mich. App. 118 (1999) 2, 7, 19,

20, 21

 Rhode v. E & T Investments, Inc., 6 F. Supp. 2d 1322 (M. D. Ala. 1998) 13

 Shearson/American Express, Inc. v. McMahon, 482 U.S. 220 (1987) 10, 16

 Smiley v. Citibank, 517 U.S. 735 (1996) 14

 Southern Energy Homes v. Ard, 2000 Ala. LEXIS 218 (June 2, 2000). 15

 Southern Energy Homes v. Lee, 732 So. 2d 994 (1999) 15

 Tipton v. Atchison, T & S.F.Ry. Co., 298 U.S. 141 (1936) 15

 United States v. Concentrated Phosphate Export Assn., Inc., 393 U.S. 199, 203 (1968) 24

 United States v. Larionoff, 431 U.S. 864 (1977) 14

 United States v. W. T. Grant Co., 345 U.S. 629 (1953) 24

 Wainwright v General Motors Corporation, Case No. 99-930409 CK,

(Wayne County Circuit Court, 2000) 9

White Star Line v. Star Line of Steamers, 141 Mich. 604 (1905) 23

 Wilson v. Waverlee Homes, Inc., 954 F. Supp. 1530 (M.D. Ala. 1997)

aff'd, 127 F.3d 40 (11th Cir.1997) 7, 12

OTHER AUTHORITIES

 Herbert Newberg, Newberg On Class Actions § 2.17 (3d ed 1992) 24

 H.R. Rep. 93-1107, 93 Cong., 2d Sess. 41, reprinted in 1974

U.S.C.C.A.N. 7702, 7723 12

 119 Cong. Rec. 972 (Jan. 12, 1973) 11

 64 Fed. Reg. 19700, 19708-09 (Apr. 22, 1999) 14

 15 U.S.C. §2301 et seq. 13

 15 U.S.C. §2310(a) 11, 17

 15 U.S.C. § 2310(a)(1) 7, 17

 15 U.S.C. § 2310(a)(3) 16, 17

 15 U.S.C. §2310(d) 11, 17

 15 U.S.C. § 2310(d)(1) 7, 17

 16 C.F.R. 703 7, 13

 16 C.F.R. 703.2 11

 16 C.F.R. 703.3 11

 16 C.F.R. § 703.5(j) 2, 7, 14

 MCL 257.1403 § (5)(a)(b) 18

 MCL 257.1405 (5)(c) 18

 MCL 257.1407(1) 9, 18

 MCL 257.1407 (2) 19

STATEMENT OF JURISDICTION

The statement of jurisdiction by appellant in its brief is correct with the exception of its gratuitous comment that the trial court made a "mistaken assumption" regarding Magnuson-Moss Warranty Act trumping the Federal Arbitration Act. The trial court’s decision was consistent with every published federal court decision on this issue, the opinion of the Federal Trade Commission, the opinion of the Michigan Attorney General, and a recent decision of the Texas Court of Appeals.

COUNTER STATEMENT OF QUESTIONS PRESENTED

1. Did the trial court err in finding both General Motors’ Original and its Revised Arbitration Clauses to be Illegal for Requiring Consumers to Arbitrate Claims for Breach of Express Warranty Under the Magnuson-Moss Warranty Act, When Its Ruling Comports With (a) The Holdings of Every Federal Court to Publish A Decision On the Subject; (b) the Formal Interpretation of the Federal Trade Commission (the agency charged with Administering and Interpreting the Magnuson-Moss Warranty Act; and (c) the Opinion of the Attorney General for the State of Michigan?

The trial court answers: "no"

Abela answers: "no"

2. Does the Federal Arbitration Act Preempt the Generally Applicable Anti-Waiver Provision of the Michigan Lemon Law?

The trial court answers: "no"

Abela answers: "no"

3. When General Motors’ Original Arbitration Clause Explicitly Required Plaintiffs to Waive a Variety of Statutory Rights Under the Michigan Lemon Law, Did the Trial Court Err in Finding that Clause Illegal Even Though General Motors’ Unilaterally (But Not Irrevocably) Rewrote Part Of It On the Eve of the Summary Disposition Hearing?

The trial court answers: "no"

Abela answers: "no"

INTRODUCTION AND SUMMARY OF ARGUMENT

Defendant/Appellant General Motors Corporation ("GM")’s Application for Leave to Appeal asks this Court to decide (a) that claims for breach of express warranty under the Magnuson-Moss Warranty Act ("MMWA") may be forced into binding arbitration; (b) that GM may require Michigan consumers to waive certain protections found within Michigan’s New Motor Vehicle Warranty Act ("the Lemon Law"), because the Federal Arbitration Act ("FAA") preempts the provision of the Lemon Law prohibiting the waiver of those protections; and (c) that the trial court should not have ruled that the arbitration clause that GM imposed upon its employee consumers between March 1, 1999 and July 17, 2000 was illegal, because GM had unilaterally and retroactively (but not necessarily irrevocably) abandoned that clause and replaced it with a less onerous one shortly before the hearing on summary disposition.

For GM to prevail and have the trial court’s order overturned, it must succeed in winning all three of these issues. The overwhelming weight of authority dictates that it should win none of them.

With respect to the MMWA, GM unfairly uses a lot of rhetoric to depict a trial court ruling that is contrary to a series of U.S. Supreme Court decisions and other authorities. Nothing could be further from the truth. In fact, the Supreme Court has never addressed the issue present here. The MMWA, unlike the statutes involved in any of the Supreme Court cases cited by GM, specifically provides for alternative dispute resolution of claims under that statute. MMWA provides that consumers may be required to "initially" resort to ADR mechanisms, as opposed to being required to only or finally resort to such mechanisms. GM’s citation to cases involving statutes other than MMWA (as if all federal statutes were the same in all respects) tells nothing about whether claims may be forced into arbitration under the MMWA, with its unique provisions.

In fact, the trial court ruling fits neatly within the broad trend of authority on the arbitrability of MMWA claims. What GM does not tell this Court is:

o Every published federal court decision on the issue supports the trial court’s holding that MMWA claims may not be forced into arbitration.

o The federal agency charged with administering the MMWA, the Federal Trade Commission ("FTC"), has formally interpreted the statute the same way that the trial court did. FTC Rule 703, 16 C.F.R. 703.5(j), specifically provides that "decisions [issued by alternative dispute resolution mechanisms] shall not be legally binding on any person."

o The Michigan Attorney General has formally interpreted the statute the same way that the trial court has, and filed papers supporting the plaintiffs in this case.

o Just this year, the Texas Court of Appeals also reached the same conclusion as did all of the published federal cases, the FTC and the trial court.

The only published authority supporting GM’s position is a 5-4 decision of the Alabama Supreme Court that overrules (in just a few sentences) a decision that same court had reached to the contrary about a year before.

The Lemon Law provides that no right protected under it may be waived. One of the many rights it protects is the right to take a Lemon Law claim to court. This Court has recently ruled that a "baseline fundamental" requirement of a legal and enforceable arbitration clause is that it not conflict with any statutory entitlement. See Rembert v. Ryan’s Family Steak Houses, 235 Mich. App. 118 (1999) (the arbitration clause at issue was enforceable because it " provides for all of the types of relief that would otherwise be available in court. . . .") GM improbably argues that the Lemon Law’s statutory anti-waiver protection is preempted by the FAA, on the grounds that the generally applicable no-waiver rule "discriminates" against arbitration clauses. In asking this Court to disregard part of the Lemon Law, and the broader doctrine that arbitration clauses may not require consumers to waive statutory rights, GM would have this Court extend FAA preemption far more broadly than any other court has done.

In addition to abolishing the right to take a Lemon Law claim to court, GM’s Original Arbitration Clause effectively eliminated a number of other provisions in the Lemon Law. Among other things, the clause (a) empowered arbitrators to disregard the law in favor of whatever they "consider[ed] to be fair"; (b) prohibited prevailing consumer plaintiffs from recovering attorneys’ fees under state and federal statutory claims, even though the statutes explicitly permit the recovery of such fees; and (c) prohibited prevailing consumers from receiving a variety of damages and remedies to which they are entitled under state and federal consumer protection statutes. The Original Arbitration Clause also provided for the firing of any GM employee/consumer who exercised their constitutional rights to go to court to challenge the legality of the Clause.

GM argues that the trial court erred in declaring this clause illegal. First, GM puts forward a great deal of rhetoric about how plaintiff agreed to this clause, and thus should not be heard to challenge its legality. GM’s premise seems to be that no adhesionary contract may be found to violate any consumer protection statute, so long as a consumer has agreed to it. To state this plainly incorrect proposition is to answer it: illegal contracts are illegal and unenforceable, without regard to the agreements of a consumer.

Second, GM notes that on the eve of the summary judgment hearing it retroactively and unilaterally withdrew its Original Arbitration Clause, and thus argues that the trial court erred in ruling upon its legality. In light of the fact that GM could easily re-instate the clause at any time, however, and that for more than a year GM had imposed its Original Arbitration Clause upon plaintiff and other employee/consumers in violation of Michigan law, the trial court was surely correct in addressing it.

STATEMENT OF FACTS

GM’s Original Arbitration Clause

GM operates a New Vehicle Purchase Program ("Program"), whereby GM employees, retirees and surviving spouses who wish to purchase or lease a GM car may receive certain discounts. On March 1, 1999, GM amended the Program to require its employee/consumers purchasing or leasing new motor vehicles under the Program after that date to submit any unresolved warranty dispute to binding arbitration. Under this amendment ("GM’s Original Arbitration Clause"), GM required all Program purchasers to waive their rights to bring a lawsuit for any dispute involving warranty repairs made to the vehicle or regarding the extent to which warranty coverage is provided on a vehicle. See Exhibit A hereto.

Under GM’s Original Arbitration Clause, any violations of the Program rules by an employee/consumer would result in sanctions against the employee, retiree or surviving spouse. Sanctions may include, but are not limited to: loss of Program privileges, repayment of monies, termination of employment and/or legal action. (See Exhibit A hereto at 1, Agreement and Purchase Certificate). In other words, an employee/consumer who attempted to bring a court challenge to the arbitration clause could be fired for this exercise of her or his constitutional rights.

GM’s standard practice was to provide its Original Arbitration Clause to an employee/consumer after she or he had selected a vehicle and taken delivery of it. Upon receiving the Original Arbitration Clause (and other papers related to the Program), the employee/consumer was then told to either sign the agreement and waive her or his rights to bring a suit in court, or pay several thousand dollars more for the car. She or he could not return the car, however; it was already titled in their name and the car could no longer be sold as a new vehicle.

The most remarkable provision of GM’s Original Arbitration Clause reads as follows:

In making a decision, the arbitrator does not have to apply legal principles. The arbitrator’s decision will be one that (1) the arbitrator considers to be fair and (2) falls within the scope of the arbitrator’s authority under these rules.

 

Binding Dispute Resolution Process for General Motors Vehicle Purchase Programs, ("Original Arbitration Rules") November 1999, at 26, ¶ 26A (attached as Exhibit C hereto).

GM’s Original Arbitration Clause had several other salient provisions. It provided that arbitrators may not award "punitive damages, other types of penalties, or attorneys’ fees." It also provided that an arbitrator may not adjudicate "claims for mental anguish." The arbitration clause also shortened the statute of limitations for any warranty claims an employee/consumer might bring from the limitations period provided under law to the term of the express warranty. Exhibit C at 13, ¶ 2C. Also notable in light of the past month’s headlines, GM’s Original Arbitration Clause has a sweeping secrecy provision: "It is the policy of the Better Business Bureau that records of the Dispute Resolution Process are private and confidential." Original Arbitration Rules, Exhibit C at 33, ¶ 28.

Plaintiff’s Challenge to the Arbitration Clause

On July 19, 1999, Plaintiff Barbara Abela, f/k/a/ Rybak, purchased and took delivery a new 1999 Chevrolet Crew Cab pick-up truck under the Program. On July 24, 1999, she received the GM New Vehicle Purchase Program Agreement and Purchase Certificate which contained the arbitration requirement.In August of 1999, Abela began to experience engine defects with the truck. The primary concern was that the engine would surge and push the truck forward while stopped in traffic. Abela presented her truck for repair to authorized GM dealers pursuant to GM’s Express Limited Warranty on four occasions between August 9, 1999 and September 27, 1999. The repair attempts by GM were unsuccessful. On October 5, 1999, Abela brought suit against GM alleging breach of warranty claims under the Michigan Uniform Commercial Code and the Magnuson-Moss Warranty Act and violation of the Michigan Lemon Law. GM responded by filing a Motion to Compel Arbitration.

On December 28, 1999, Abela filed her First Amended Class Action Complaint alleging that the Program violated the Magnuson-Moss Warranty Act, the Michigan Lemon Law and the Michigan Consumer Protection Act. The parties agreed that the issues should be decided by Cross-Motions for Summary Disposition and entered a briefing schedule. On August 9, 2000, the court granted Abela’s Motion for Summary Disposition and denied GM’s Motion for Summary Disposition.

The Attorney General’s Action

On February 25, 2000, pursuant to the Michigan Consumer Protection Act, Jennifer Granholm, the Michigan Attorney General, sent GM a Notice of Intended Action alleging that GM’s Original Arbitration Clause violated the Michigan Consumer Protection Act, the Lemon Law, the MMWA, and several other statutes. See Exhibit D hereto. Among other allegations, the Attorney General concluded that:

4. The sole exception to a claimant’s entitlement to seek legal and equitable relief under § 2310(d)(1) of the Magnuson-Moss Warranty Act is the requirement that the claimant exhaust an informal dispute settlement mechanism, pursuant to § 2310 (a)(1). 15 U.S.C. § 2310(a)(1).

 

5. A claimant need only exhaust an informal dispute settlement mechanism offered by a warrantor pursuant to § 2310(a)(1) of the Magnuson-Moss Warranty Act if the mechanism meets the minimum requirements prescribed by the applicable Federal Trade Commission regulations. Wilson v. Waverlee Homes, Inc., 954 F. Supp. 1530, 1537 (MD Ala. 1977).

 

6. Arbitration provided by a warrantor as an informal dispute settlement mechanism does not meet applicable Federal Trade Commission regulations pursuant to 15 U.S.C. § 2310(a)(1) if it is binding on a claimant. Id., 16 C.F.R. § 703.5(j).

 

7. Predispute agreements to arbitrate statutory claims are not valid if they require a claimant to waive any substantive rights or remedies under the statute Rembert v. Ryan’s Steak House, 235 Mich. App. 118, 166 (1999).

 

Exhibit D at 4. The Attorney General Letter concludes that "[i]f no assurance of discontinuance is accepted, then the Attorney General may file a lawsuit against [GM] in circuit court or take other appropriate action after expiration of the applicable time periods." Exhibit D at 8.

GM’s Revised Arbitration Clause

On July 12, 2000, GM modified its arbitration program. These modifications were unilateral, in keeping with a provision purporting to give GM this power in its Original Arbitration Clause. GM also made these changes retroactive to March 1, 1999. The changes were entirely caused by this litigation. GM candidly stated to the trial court in its brief opposing plaintiff’s motion for summary disposition, at 16, that "[s]ince Abela filed her Motion, General Motors has decided to change the arbitration rules in a manner that moots each of these issues."

GM’s modifications eliminated several of the more sweeping provisions to which plaintiff had objected, including the requirement that consumers could only receive limited damages, the prohibition on attorneys’ fees to prevailing consumers, and the direction that arbitrators need not apply legal principles. It also stated that employees bringing a legal challenge against the program would not be terminated for doing so.

GM’s Revised Arbitration Clause continues to require binding arbitration of claims for breach of express warranty under the MMWA, however, and it continues to require consumers to waive their Lemon Law right to a judicial remedy.

The Trial Court’s Ruling

The trial court briefly recited the procedural facts of the case. It then described and cited to the language of the MMWA, the legislative history of that act (citing in part to statements by Representative Moss), to the interpretations and requirements of the FTC, to the leading federal case addressing whether MMWA claims may be forced into arbitration, and to the rulings of the Michigan Attorney General. It concluded that claims for breach of express warranty under MMWA may not be forced into binding arbitration, and thus held that GM’s arbitration clause was illegal under MMWA.

Finally, the trial court held that GM’s arbitration clauses violated the Lemon Law:

Michigan’s Lemon Law, provides that the rights and remedies under the Act may not be waived by the consumer. MCL 257.1407(1). However, GM’s arbitration agreement violates this section in several respects including by requiring that the arbitration be binding, granting the arbitrator the authority to disregard the law and barring certain remedies, damages and attorney fees to a prevailing consumer. GM claims that it has since revised the program to eliminate any violations. However, this does not erase past violations and does not assure future compliance. Therefore, this claim is without merit.

 

Trial Court order, Exhibit 2 to GM’s Application for Leave, at 3.

The trial court is not the only Michigan trial court to reach this result. On February 4, 2000, in a separate Lemon Law action filed in Wayne Circuit Court captioned Wainwright v General Motors Corporation, file number 99-930409 CK, Judge Amy Hathaway struck down GM’s Original Arbitration Clause, on the grounds that it violated Federal and State law. (See attached order as Exhibit F).

STANDARD OF REVIEW

Abela concurs that this Court must review the trial court's grant or denial of a motion for summary disposition de novo. Paul v Lee, 455 Mich 204, 210 (1997).

ARGUMENT

I. THE TRIAL COURT CORRECTLY HELD THAT CLAIMS FOR BREACH OF EXPRESS WARRANTY UNDER MMWA MAY NOT BE FORCED INTO BINDING ARBITRATION.

 

GM repeatedly attacks the trial court for using "the wrong standard." Brief at 1, 2, 3, 7, 13. In addition to addressing the text and legislative history of MMWA, the trial court also took note of the facts that the alternative dispute provisions of the MMWA are more recent than the FAA and more specific (with respect to the arbitrability of claims for breach of express warranty under the MMWA) than the FAA. According to GM, the trial court should have ignored these factors in favor of an analysis that exclusively focused upon the text and legislative history of the MMWA. GM’s attack is unfair and unfounded.

First, as set forth above, the trial court did analyze the text and legislative history of the MMWA, and found that both sources demonstrate that claims for breach of express warranty under the MMWA may not be forced into arbitration. GM is plainly wrong in suggesting that the trial court failed to address these factors. In Shearson/American Express, Inc. v. McMahon, 482 U.S. 220 (1987), the Supreme Court set forth the test for evaluating the arbitrability of statutory claims:

If Congress did intend to limit to prohibit waiver of a judicial forum for a particular claim, such an intent ‘will be deducible from [the statute’s] text or legislative history . . .

 

482 U.S. at 227. In this case, the trial court plainly did "deduce" such an intent from the MMWA’s text and legislative history. As the following sections will set forth, the trial court’s conclusions on each of these points is plainly correct.

Second, the other factors mentioned by the trial court (the greater specificity and more recent passage of MMWA) are prescribed as relevant factors in the U.S. Supreme Court decision cited by the trial court. See HCSC-Laundry v. United States, 450 U.S. 1, 6 (1981). The Supreme Court has never retracted its direction that courts should consider these factors in making such decisions. Accordingly, the trial court’s articulated standard is not "wrong," it is just an alternative approach that also reached the same result as the approach preferred by GM.

A. THE TEXT AND LEGISLATIVE HISTORY OF MMWA ACT MAKE CLEAR THAT CLAIMS FOR BREACH OF EXPRESS WARRANTY UNDER THE ACT MAY NOT BE FORCED INTO BINDING ARBITRATION.

 

The MMWA was passed in 1974. It sets out specific requirements for disclosures, duties and remedies associated with warranties on consumer products.

The MMWA creates an unqualified right of access to the courts for consumers claiming breach of warranty: "a consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with an obligation under this title or under a written warranty, implied warranty, or service contract, may bring suit for damages and other legal and equitable relief." 15 U.S.C. §2310(d). The Act also establishes that under limited circumstances consumers may be required to submit claims to a non-binding dispute resolution mechanism before resorting to court: the consumer may not commence a civil action "unless he initially resorts to such procedure." 15 U.S.C. §2310(a) (emphasis added). Unlike the various other statutes interpreted in the cases identified by GM, the MMWA expressly addresses the subject of alternative dispute resolution. It makes clear that ADR (such as arbitration) is permitted if – but only if – it is non-binding.

The legislative history of the MMWA confirms that Congress did not authorize the use of binding arbitration clauses in warranties. Congressman Moss, the named sponsor of the Act, explained to his colleagues in floor remarks that these provisions allow an opportunity for private dispute resolution, without limiting a warranty claimant’s right to ultimately pursue judicial remedies. 119 Cong. Rec. 972 (Jan. 12, 1973). Representative Moss described such alternative dispute procedures as a "prerequisite to suit," but not as a complete replacement to suit (as GM would have it). The House report accompanying this legislation further states, "An adverse decision in any informal dispute settlement proceeding would not be a bar to a civil action on the warranty involved in the proceeding." H.R. Rep. 93-1107, 93 Cong., 2d Sess. 41, reprinted in 1974 U.S.C.C.A.N. 7702, 7723.

B. THE OVERWHELMING WEIGHT OF JUDICIAL AUTHORITY HOLDS THAT CLAIMS FOR BREACH OF EXPRESS WARRANTY UNDER THE MMWA MAY NOT BE FORCED INTO BINDING ARBITRATION.

 

When asked to enforce an arbitration clause where a consumer asserts warranty claims, federal courts have concluded that the MMWA vests consumers with an unwaivable right of access to the courts to settle warranty disputes and subsequently precludes express warrantors from requiring consumers to arbitrate warranty-based claims. As the U.S. District Court for the Middle District of Alabama has summarized:

[T]he language of the Magnuson-Moss Act, the regulations adopted pursuant to it, and its legislative history all confirm that Congress and the Federal Trade Commission intended that, with the exception of an informal and non-binding dispute resolution mechanism regulated and defined under the Act, consumers are to retain full and unfettered access to the courts for the resolution of their disputes . . . [Where] the arbitration clauses contained in the installment sales and financing contracts between the plaintiffs and [the dealer-warrantor] are binding, rather than non-binding, and are thus a bar to court relief, they conflict with the Magnuson-Moss Act and are unenforceable.

 

Wilson v. Waverlee Homes, Inc., 954 F. Supp. 1530, 1537-38 (M.D. Ala. 1997), aff'd, 127 F.3d 40 (11th Cir.1997). GM asserts that Wilson is "contrary to all other precedent on this issue," Brief at 13, n. 2, but then it points to no case other than the Alabama Supreme Court’s most recent flip flop in Ard, discussed below. GM maintains an eloquent silence on the subject of any other precedents showing that MMWA claims may be forced into arbitration.

In fact, it is Ard, not Wilson, that stands alone. First, it is important to note that Wilson was affirmed on appeal by the U.S. Court of Appeals for the Eleventh Circuit, albeit without a published opinion. In addition, Wilson’s holding has been embraced and affirmed by a number of other federal courts. See Raesly v. Grand Housing, Inc., 105 F. Supp. 2d 562 (S.D. Miss. 2000) ("the court, in light of the cited authorities, will deny at this time defendant’s motion to compel arbitration as it relates to their claim for breach of an express written warranty") (citing Wilson v. Waverlee among other authorities); Rhode v. E & T Investments, Inc., 6 F. Supp. 2d 1322, 1332 (M. D. Ala. 1998) (refusing to compel consumer’s claims for breach of written and express warranties against warrantor); Boyd v. Homes of Legend, 981 F. Supp. 1423,1440-41 (M.D. Ala. 1997) (concluding that Magnuson-Moss Warranty Act precludes binding arbitration of claims based upon written warranties). By contrast, no federal court has ever published a decision disagreeing with Wilson. In addition, at least one state court of appeals has reached the same conclusion. See In re: Van Blarcum, 19 S.W.3d 484 (Tex. Ct. App. 2000), on appeal to Texas Supreme Court ("Because the Agreement compels arbitration of the Van Barcums’ written warranty claims in violation of the Act, we hold the Agreement is invalid and unenforceable in its entirety. . . .") GM’s assertion that Wilson is "contrary to all other precedent on this issue" is worse than selective, it is dramatically and demonstrably wrong.

C. THE FEDERAL AGENCY CHARGED WITH INTERPRETING THE MMWA HAS CONCLUDED THAT CLAIMS FOR BREACH OF EXPRESS WARRANTY UNDER THE ACT MAY NOT BE FORCED INTO BINDING ARBITRATION.

 

Under 15 U.S.C. §2301 et seq. Congress delegated to the FTC authority to promulgate rules implementing the Act. In carrying out this responsibility, the FTC issued Rule 703, which outlines the conditions a warrantor must meet in instituting an alternative dispute resolution mechanism. 16 C.F.R. 703. The Rule, echoing the Act, states, "decisions [issued by alternative dispute resolution mechanisms] shall not be legally binding on any person" and contemplates the availability of judicial remedies after such a mechanism is used. 16 C.F.R. § 703.5(j).

Less than 18 months ago, in its most recent pronouncement on the issue, the FTC reaffirmed its position that express warranty claims under MMWA may not be forced into arbitration:

Following a recent review of Rule 703, the Agency re-affirmed its interpretation the Act:

[In 1975] the Commission determined that ‘reference within the written warranty to any binding, non-judicial remedy is prohibited by the Rule and the Act.’ The Commission believes that this interpretation continues to be correct. Therefore, the Commission has determined not to amend [its Rule] to allow for binding arbitration. [The Rule] will continue to prohibit warrantors from including binding arbitration clauses in their contracts with consumers that would require consumers to submit warranty disputes to binding arbitration.

 

Final Action Concerning Review of Interpretations of the Magnuson-Moss Warranty Act, 64 Fed. Reg. 19700, 19708-09 (Apr. 22, 1999).

The FTC’s interpretation of the Magnuson-Moss Warranty Act is entitled to great deference. Olmstead v. L.C. Ex Rel. Zimring, 527 U.S. 581, 598 (1999) (re-affirming that "the well-reasoned views of the of the agencies implementing a statute ‘constitute a body of experience and informed judgment to which courts...may properly resort for guidance"); Smiley v. Citibank, 517 U.S. 735, 739 (1996) (stating the propriety of "defer[ring] to the reasonable judgments of agencies with regard to the meaning of ambiguous terms in statutes that they are charged with administering"); United States v. Larionoff, 431 U.S. 864, 872 (1977) (the interpretation of an agency regulation by the promulgating agency carries "controlling weight unless it is plainly erroneous or inconsistent with the regulation"), quoting Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945).

D. NONE OF THE AUTHORITIES CITED BY GM PERSUASIVELY REFUTE THE TEXT, LEGISLATIVE HISTORY, CASE LAW AND AGENCY INTERPRETATION SET FORTH ABOVE.

 

The Alabama Supreme Court, until a few weeks ago, agreed with the Wilson court that arbitration of MMWA claims could not be compelled. See Southern Energy Homes v. Lee, 732 So. 2d 994 (1999). In June of this year, however, with the change of one vote, the Alabama Supreme Court reversed Lee in another case involving the same defendant, Southern Energy Homes v. Ard, 2000 Ala. LEXIS 218 (June 2, 2000). The court explained this quick-change as follows:

[In Lee this court held] that the Magnuson-Moss Act invalidates arbitration provisions in a written warranty issued by a manufacturer of consumer goods. Justice See of this Court, however, filed a scholarly and thorough dissent in Lee. We now opine that Justice See’s dissent in Lee is correct and that the majority opinion is incorrect. Therefore, we overrule the majority opinion in Lee and adopt Justice See’s dissent.

 

Ard, 2000 Ala. Lexis 218, at *11.

As explained above, the Ard ruling is contrary to that of every published federal law decision on the matter, as well as the considered pronouncements of the federal agency charged with interpreting this law, and is entitled to no particular deference. Interpretation of federal statutes is a matter of federal, not state, law. See In re Columbia Gas Systems, 997 F.2d 1039, 1055 (3^rd Cir. 1993) ("It is axiomatic that federal law governs questions involving the interpretation of a federal statute."); Prudential Ins. Co. of America v. Goodman, 895 F. Supp. 137, 140 (S.D. Tex. 1995). Within the federal system, state courts routinely decide matters of federal law stemming from the federal Constitution and statutes. The decisions of state courts on such matters are not binding on federal courts, see Tipton v. Atchison, T & S.F.Ry. Co., 298 U.S. 141, 151-52 (1936), Al-Site Corp v. VSI Intern., Inc., 842 F. Supp. 507, 509 (S.D. Fla. 1993) ("[f]ederal courts are not bound by state court decisions as to the effect of . . . federal statutes") (citations omitted), and similarly should not control enforcement of the MMWA by Michigan courts.

GM also claims that the trial court’s order is in conflict with numerous decisions of the U.S. Supreme Court, citing cases involving all sorts of statutes other than the MMWA. GM conveniently glosses over the central difference between the MMWA and RICO, the Sherman Act, and the other statutes discussed in the cases GM cites: MMWA has a provision dealing with alternative dispute resolution that permits such procedures if – and only if – they are non-binding. GM blasts the trial court for failing to discuss cases dealing with statutes such as RICO, but this case involves the MMWA, with its unique dispute resolution provision, and has nothing to do with such other statutes. The Supreme Court has plainly recognized that it is possible for claims under some statutes to be exempt from forced arbitration, supporting the point that the arbitrability of claims under different statutes must be separately reviewed and analyzed.

Finally, GM asserts in its Application, at 2, that the arbitration "provision at issue here . . . has nothing to do with the MMWA’s objective ‘to make warranties understandable to consumers, and to ensure that the promises made in warranties are lived up to.’" (citing remarks of Sen. Magnuson). The trial court was surely correct, however, in concluding that an arbitration program that excuses an arbitrator from "applying legal principles" goes a long way towards undermining an act designed to "ensure that the promises made in warranties are lived up to."

E. GM’S VIOLATION IS NOT EXCUSED BY THE CLAIM THAT ITS ARBITRATION CLAUSE IS "FORMAL."

GM’s claims that the trial court erred in characterizing GM’s arbitration program as impermissibly binding under Section 110(a)(3) because the program is in fact a "‘formal adversary proceeding’ under Section 110(d)," Br. at 16. This argument wholly lacks support from legal authority, or from the facts of this case, and rests ultimately on GM’s naked assertion that the program is "just like a civil action in federal courts." Br. at 17. Section 110 states explicitly that Congress under the MMWA established its policy preference for informal dispute resolution procedures. 15 U.S.C. § 2310(a)(1). The Act enforces this policy preference by making such procedures a non-binding exhaustion requirement for injured parties seeking to litigate, while requiring only that warrantors create such procedures in compliance with FTC rules and incorporate the procedures into their written warranty agreements. 15 U.S.C. § 2310(a)(3). Contrary to GM’s suggestion, the Act nowhere references "‘formal adversary proceedings.’" Section 110(d) creates only a right of action in state or federal court for injured consumers. 15 U.S.C. § 2310(d)(1). GM itself fails to differentiate its purportedly formal proceedings from those permitted under the Act, or to explain why the glaring difference of its arbitration program’s binding nature somehow constitutes a thing apart from rather than a blatant violation of Section 110(a).

As was noted in the Statement of Facts, GM's Program reserves for itself (but not for its employee/consumers) the absolute right to "unilaterally modify, change, or withdraw the program at any time." In addition, as set forth above, GM's Original Arbitration Clause provided that "[i]n making a decision, the arbitrator does not have to apply legal principles." A dispute resolution program that can be altered in any way and at any time, and which does not even commit itself to following the consumer protection laws, is anything but formal and in no way resembles the civil actions provided for under Section 110(d). GM’s reliance on the "formal" nature of its binding arbitration program in the face of a statutory command that alternative dispute resolution procedures be non-binding amounts to nothing more than sophistry and provides no basis for revisiting the trial court’s denial of the motion to compel arbitration.

II. THE TRIAL COURT CORRECTLY RULED THAT GM’S ARBITRATION CLAUSE IS ILLEGAL UNDER THE LEMON LAW.

 

A. GM’S ORIGINAL AND CURRENT ARBITRATION CLAUSES BOTH ILLEGALLY REQUIRE GM EMPLOYEE/CONSUMERS TO WAIVE A NUMBER OF RIGHTS AND REMEDIES GUARANTEED UNDER THE LEMON LAW.

 

Pursuant to the Lemon Law "any rights and remedies provided a consumer under this act may not be waived." MCL 257.1407 (1). One of the rights that a consumer has under the Lemon Law is the right to reject the decision of the Manufacturer’s Dispute Settlement Process and pursue remedies provided for under the Act, MCL 257.1405 (5)(c). There is absolutely no dispute that both GM’s Original Arbitration Clause and its Revised Arbitration Clause require consumers to waive this right, as both clauses purport to require consumers to accept "binding" and final arbitration of Lemon Law claims. Unless GM prevails on its sweeping assertion that this anti-waiver provision of the Lemon Law is preempted by federal law, it necessarily follows that the trial court was right in holding that both GM’s Original Arbitration Clauses are illegal under Michigan law.

In addition to the forced waiver of the right to reject the arbitrator’s decision, GM’s Original Arbitration Clause would also have effectively required the waiver of the right to be protected by a clear and definite body of law. By its terms, the Lemon Law provides clear presumptions on what constitutes a lemon (four repair attempts for the same defect or condition or 30 days in the repair facility). This gives consumers a clear, concise understanding of what constitutes a presumptive lemon. MCL 257.1403 § (5)(a)(b). These presumptions are lost when the arbitrator is not required to follow state or federal law, however, and as noted above, GM’s Original Arbitration Clause openly provided that "[i]n making a decision, the arbitrator does not have to apply legal principles." Where this startling "rule" governs, consumers effectively have no enforceable "rights" under the Lemon Law at all.

Similarly, the Lemon Law provides that a prevailing consumer has a right to attorneys’ fees and costs. MCL 257.1407 (2). As set forth above, however, GM’s Original Arbitration Clause explicitly stripped its employee/consumers of this statutory right. GM suggests that this violation of the Lemon Law in its Original Arbitration Clause is not very significant, because "[a] right to attorney fees similarly is of no consequence because the use of attorney. . . ." Brief at 6, n.1. GM is second-guessing the Michigan Legislature’s judgment that many individual consumers will not be able to effectively vindicate their rights under the Lemon Law without representation, and thus is refusing to accept this Court’s judgment in Rembert that an arbitration clause may not wipe away the substantive protections of the statutes.

In fact, this Court recognized that the Lemon Law’s attorney’s fee provisions is a crucial right for consumers in Jordan v. Transnational Motors, Inc., 212 Mich App 94 (1995):

In consumer cases such as this, the monetary value of the case is typically low. If courts focus only on the dollar value and the result of the case when awarding attorney fees, the remedial purposes of the statutes in question will be thwarted. Simply put, if attorney fee awards in these cases do not provide a reasonable return, it will be economically impossible for attorneys to represent their clients. Thus, practically speaking, the door to the courtroom will be closed to all but those with either potentially substantial damages, or those with sufficient economic resources to afford the litigation expenses involved. Such a situation would indeed be ironic: it is precisely those with ordinary consumer complaints and those who cannot afford their attorney fees for whom these remedial acts are intended.

 

Accordingly, GM’s Original Arbitration Clause not only required consumers to waive statutory rights, it required consumers to waive extremely important statutory rights.

B. IT IS ILLEGAL FOR GM’S ARBITRATION CLAUSE TO DENY CONSUMERS STATUTORY RIGHTS PROTECTED BY THE LEMON LAW.

 

As noted in the summary of argument above, this Court has very recently held that a "fundamental baseline" requirement for an enforceable arbitration clause is that the clause not purport to deny individuals any statutory remedies. Rembert, 235 Mich. App. at 156-157. In light of the above, GM’s arbitration clause plainly does not meet this "fundamental baseline" and is illegal.

The Rembert case reflects the law throughout the country, as numerous courts have held that individuals may not be forced into arbitration if it does not offer them the same remedies that would be available in court. As the U.S. Court of Appeals for the Sixth Circuit held two months ago:

[E]ven if arbitration is generally a suitable forum for resolving a particular statutory claim, the specific arbitral forum provided under an arbitration agreement must nevertheless allow for the effective vindication of that claim. Otherwise, arbitration of the claim conflicts with the statute’s purpose of both providing individual relief and generally deterring unlawful conduct through the enforcement of its provisions.

 

Floss v. Ryan’s Family Steak Houses, Inc., 211 F.3d 306, 313 (6^th Cir. 2000). In the landmark case of Cole v. Burns Int’l Security Servs., 105 F.3d 1465, 1482 (D.C. Cir. 1997), similarly, the court held that arbitration must offer "all of the types of relief that would otherwise be available in court" before a court will compel arbitration. See also Paladino v. Avnet Computer Tech., Inc., 134 F.3d 1054, 1062 (11^th Cir. 1998) (Cox, J. concurring, for a majority of the court) (the arbitrability of claims under Title VII "rests on the assumption that the arbitration clause permits relief equivalent to court remedies. . . . When an arbitration clause has provisions that defeat the remedial purpose of the statute . . . the arbitration clause is not enforceable.") (citing Cole); Graham Oil Co. v. ARCO Products Co., 43 F.3d 1244, 1247-48 (9^th Cir. 1994) (invalidating an arbitration agreement that required a claimant to forfeit rights and benefits guaranteed by the Petroleum Marketing Practices Act, including imposing a limit on the recovery of punitive damages and attorneys’ fees and a one-year statute of limitations); Martens v. Smith Barney, Inc., 181 F.R.D. 243, 256 (S.D.N.Y. 1998) ("arbitration must allow remedies central to the statutory scheme...[and] sufficient to satisfy statutory purposes"); DeGaetano v. Smith Barney, Inc., 983 F. Supp. 459, 469 (S.D.N.Y. 1997) (voiding provision of arbitration agreement that disallowed attorneys’ fees to prevailing plaintiff in Title VII claim after concluding that "contractual clauses purporting to mandate arbitration of statutory claims...are enforceable only to the extent that the arbitration preserves the substantive protections and remedies afforded by the statute."); LaChance v. Northeast Publishing, Inc., 965 F. Supp. 177, 185 (D. Mass. 1997) (allowing plaintiff to pursue judicial claim under the Americans with Disabilities Act where arbitration agreement covering employment did not authorize arbitrator to provide remedy of ‘reasonable accommodation’ which plaintiff was entitled to pursue under the Act).

C. THE ANTI-WAIVER PROVISIONS AND SUBSTANTIVE PROVISIONS OF THE LEMON LAW ARE NOT PREEMPTED BY THE FAA.

 

While the FAA has no preemption provision, it is true that the U.S. Supreme Court has held that state statutes that discriminate against arbitration, singling it out for adverse treatment, are preempted by the FAA. See Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681 (1996). The anti-waiver provision of the Lemon Law is not aimed at arbitration, however, and it is not a state act "discriminating against" arbitration. It is a sweeping, generally applicable statutory provision that applies to each and every provision of the Lemon Law, not merely that law’s requirement that consumers be given the right to reject an arbitrator’s ruling.

Far from seeking an "even handed" rule of law, however, GM asks this Court to enunciate a rule that discriminates in favor of arbitration. According to GM, the Lemon Law’s "right to reject" an alternative dispute resolution decision would be the only substantive part of the Act to be exempted from the sweep of the general anti-waiver provision of the Lemon Law. Nothing in the FAA begins to require such a holding, however, and GM points to no authority suggesting such a rule.

Similarly, the general body of law adopted by this Court in Rembert that arbitration clauses may not gut the substantive terms of the state and federal statutes is not preempted by the FAA. To the contrary, this rule of law has been adopted by a number of federal courts. GM fails to cite to a single court not following this rule, much less any court striking it down as preempted.

4. THE ILLEGALITY OF THE CONTRACT IS NOT EXCUSED BY THE FACT THAT PLAINTIFF VOLUNTARILY ENTERED THE AGREEMENT.

 

As set forth above, the trial court found that GM’s arbitration clause violated a federal and a state statute and was illegal. GM’s lead argument in asking this Court to reverse this holding, Brief at 3-5, is an essay about how plaintiff "voluntarily entered" the contract. GM intones that plaintiff "could have" gone elsewhere, was not "required" to sign the contract, etc.

Putting aside that GM’s factual assertions are overly rosy, this whole line of argument is completely irrelevant for the legal issues of this case. If the trial court was right that GM’s arbitration clause is illegal, and violates both the MMWA and the Lemon Law, then it does not matter whether a consumer "enters" the contract or not. To say otherwise would be to repeal all federal and state consumer protection laws whenever a consumer can be enticed to sign her name on a piece of paper. Under Michigan law, a contract that is unlawful at the time of its making is void and can never be enforced, regardless of the parties’ subsequent actions. See Compton v. Lepak, 154 Mich. App. 360, 370-71 (1986) (holding that contract entered into in violation of statute does not become valid upon repeal of the statute because legislature "cannot validate a contract which never had a legal existence"); see also White Star Line v. Star Line of Steamers, 141 Mich. 604, 610-11 (1905) (holding that parties cannot recover under provisions of unlawful contracts).

5. THE TRIAL COURT CORRECTLY HELD THAT GM’S ORIGINAL ARBITRATION CLAUSE WAS ILLEGAL, NOTWITHSTANDING GM’S ELEVENTH HOUR EFFORT TO CURE IT.

 

As set forth above, GM’s Original Arbitration Clause contained a number of plainly illegal provisions, and the trial court so ruled. GM takes issue with the trial court’s ruling, arguing that it should not have held that GM’s Original Arbitration Clause was illegal since the clause was revised just before the summary judgment hearing.

GM’s first argument is that "there are no past violations." The fact is, however, that between March 1, 1999 and July 16, 2000, GM asserted that all of its employee/consumers (including Ms. Abela, as well as all other members of the class she seeks to represent) were bound by a plainly illegal contract. In light of the fact that Plaintiff’s principal cause of action is a request for injunctive relief declaring the arbitration clause illegal, the fact that the clause was illegal and was in force constitutes a full and completed cause of action and past violation. GM cannot simply assert that its revisions are retroactive in a manner that undoes completed past violations of the law. The revision cannot serve as a time machine to erase past actions.

GM next argues that its revisions render plaintiff’s case moot. It is absolutely clear, however, that GM’s action did not render the trial court’s order unnecessary. "When conditions change so that the relief sought by the plaintiff has been obtained or is no longer feasible, the action will not be dismissed as moot if it is shown that the change in conditions was caused by the defendant or the defendant is capable of altering the changed conditions back to their original state. Herbert Newberg, Newberg On Class Actions § 2.17 (3d ed 1992). The law is also clear that a voluntary action on the part of a defendant cannot moot a claim where the act defendant’s misconduct is capable of repetition. Id. at §§ 2.15 & 2.18.

The Supreme Court addressed this issue in great detail this past term in Friends of the Earth, Inc. v. Laidlaw, 528 U.S. 167, 120 S.Ct. 693 (2000), and held:

It is well settled that "a defendant's voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the practice." City of Mesquite, 455 U.S. at 289. "If it did, the courts would be compelled to leave 'the defendant . . . free to return to his old ways.'" 455 U.S. at 289, n. 10 (citing United States v. W. T. Grant Co., 345 U.S. 629, 632, 97 L. Ed. 1303, 73 S. Ct. 894 (1953)). In accordance with this principle, the standard we have announced for determining whether a case has been mooted by the defendant's voluntary conduct is stringent: "A case might become moot if subsequent events made it absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur." United States v. Concentrated Phosphate Export Assn., Inc., 393 U.S. 199, 203, 21 L. Ed. 2d 344, 89 S. Ct. 361 (1968). The "heavy burden of persuading" the court that the challenged conduct cannot reasonably be expected to start up again lies with the party asserting mootness. Ibid.

 

GM plainly does not begin to meet the standard for mootness articulated in the Laidlaw case In Laidlaw, the Supreme Court, also took note of the possibility that a party might game the court system by waiting until late in the litigation (here on the eve of the summary disposition hearing) to reform its practices and then claim (as GM does here) that the suit is moot. "[B]y the time mootness is an issue, the case has been brought and litigated, often (as here) for years. To abandon the case at an advanced stage may prove more wasteful than frugal." 120 S.Ct. at 710. This would certainly prove to be true here.

CONCLUSION

GM’s Application for Leave to Appeal should be denied.

Respectfully submitted,

 

 

 

______________________________ ______________________________

E. Powell Miller (P39487) Christopher M. Lovasz (P44472)

Gerard Mantese (P34424) Mark Romano (P44014)

Mantese, Miller and Mantese, P.L.L.C. Consumer Legal Services, P.C.

Co-Counsel for Plaintiff Co-Counsel for Plaintiff

1301 W. Long Lake, Suite 135 30928 Ford Road

Troy, Michigan 48098 Garden City, Michigan 48135

(248) 267-1200 (734) 261-4700

-and-

F. Paul Bland, Jr.

Trial Lawyers for Public Justice, P.C.

1717 Massachusetts Avenue, NW

Suite 800

Washington, D.C. 20036

(202) 797-8600

(202) 232-7203 (Facsimile)

Dated: September 20, 2000