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Keywords

contractplaintiffarbitrationtrialclass actionarbitration clause
contractplaintiffarbitrationtrialclass actionarbitration clauselevy

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Stenzel v. Dell, Inc., 870 A.2d 133, 2005 ME 37

Facts

Stenzel and Gerber purchased Dell computers and optional service contracts, paying sales taxes that included charges for the service contracts and shipping. They filed a class action complaint against Dell, claiming the sales tax collection was unlawful under Maine law. Dell moved to dismiss the complaint in favor of arbitration, citing an arbitration clause in the standard form agreement. The trial court found the arbitration clause enforceable and dismissed the case.

Dell is a Texas-based computer company that ships the computers it sells from Texas and Tennessee. In addition to selling computers, Dell sells service contracts on its own behalf and as an agent for service providers such as BancTec, Inc. and QualXServ, LLC. In October 2002, Stenzel purchased a Dell computer and an optional service contract through Dell's telephone sales process. He paid $2670.15, $127.15 of which was sales tax on a “taxable” amount that included the service contract and a charge for shipping the computer to Stenzel's business in Brunswick. Gerber likewise purchased a Dell computer and optional service contract, but did so through Dell's Internet website. He paid $2514.65, $10.65 of which was sales tax on a “taxable” amount that included the service contract and a charge for shipping the computer to his home in Freeport.

Issue

Did the trial court err in dismissing the plaintiffs' class action complaint in favor of enforcing the arbitration clause in the agreement with Dell?

Did the trial court err in dismissing the plaintiffs' class action complaint in favor of enforcing the arbitration clause in the agreement with Dell?

Rule

The court applied Texas law regarding the enforceability of arbitration clauses, determining that the arbitration clause was not illusory, was procedurally unconscionable, but not substantively unconscionable, and that the third-party service providers could enforce the arbitration clause as Dell's assigns.

The Supreme Judicial Court, Levy, J., held that: 1 Texas law would be applied; 2 arbitration clause was not illusory; 3 arbitration clause was procedurally unconscionable; 4 arbitration costs did not make arbitration clause substantively unconscionable; and 5 third-party service providers were assignees of retailer, and thus, providers could enforce arbitration clause.

Analysis

The court found that Stenzel and Gerber had accepted the terms of the agreement, including the arbitration clause, by taking delivery of the computers and failing to return them. The court also determined that the arbitration clause was not illusory despite the reservation clause allowing Dell to change the terms, as the integration clause indicated that the agreement was binding once accepted. The court concluded that the arbitration clause was enforceable and that the service providers could enforce it as they were considered assigns of Dell.

The court found that Stenzel and Gerber had accepted the terms of the agreement, including the arbitration clause, by taking delivery of the computers and failing to return them. The court also determined that the arbitration clause was not illusory despite the reservation clause allowing Dell to change the terms, as the integration clause indicated that the agreement was binding once accepted. The court concluded that the arbitration clause was enforceable and that the service providers could enforce it as they were considered assigns of Dell.

Conclusion

The Supreme Judicial Court affirmed the trial court's decision to dismiss the class action complaint in favor of arbitration, ruling that the arbitration clause was enforceable and applicable to the third-party service providers.

Affirmed.

Who won?

Dell, Inc. and the third-party service providers prevailed because the court upheld the enforceability of the arbitration clause, determining that the plaintiffs had accepted the terms of the agreement.

Dell, Inc. and the third-party service providers prevailed because the court upheld the enforceability of the arbitration clause, determining that the plaintiffs had accepted the terms of the agreement.

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