There is a famous quote oft-repeated by judges that a client who serves as his own lawyer has a fool for a client. "Pro se litigants" as they are referred to by the bar rarely succeed in getting a fair day in court. In an opinion rendered today by the Maryland Court of Special Appeals, however, a well prepared and apparently legally shrewd pro se litigant won his battle against Gateway Computer Company of South Dakota over procedural squabbles arising from the small print contained in the agreements he was required to sign when he purchased his EMachine from Best Buy.
As the Court noted in its opinion, the dispute giving rise to the appeal had a "humble origin." A Best Buy customer purchased a computer that didn't work properly. In a scenario many are familiar with, after many hours on the phone with Gateway technical support and after presenting to Best Buy and being told they would not fix the machine without charging him several hundred dollars, he sued Gateway and Best Buy for his money back ($377.98), plus $30,000 in consequential damages. Sounds simple enough, right? Well, here's where the fun began for the pro se plaintiff.
The plaintiff filed suit in the Circuit Court for St. Mary's County-a Maryland state court, alleging breach of express and implied warranties and violation of certain state consumer protection and federal warranty laws. Inside the Emachine packing box, however, was a document entitled "One Year Limited Warranty" that provided, among other things, that all disputes were to be arbitrated, not litigated, and that South Dakota law would govern the resolution of all disputes. As a result, the circuit court dismissed the case even though the plaintiff had asked for more time to conduct prehearing discovery.
Well, the plaintiff did not give up after dismissal. He appealed his case to the Maryland Court of Special Appeals asserting eleven grounds upon which the circuit court erred. Today, the court issued its published opinion. After a significant investment of time and money way beyond the amount in dispute,the plaintiff won and he won big indeed because of the jurisprudence enuniciated by the Court in its decision!
The Court of Special Appeals, in a very interesting published opinion styled Henry v. Gateway, Inc., concluded that the plaintiff's right to pre-hearing discovery was not enforced by the trial court and that he was entitled to learn of certain information from Gateway before the motions hearing that resulted in dismissal. The Court concluded that the trial court erred in dismissing the case.
As a second and more legally interesting basis for reversal, the Court analyzed its role in reconciling out of state federal law against clear and contrary law from our state supreme court, the Court of Appeals of Maryland. The federal issue before the court was whether federal warranty laws (Magnuson Moss Act) prevailed over federal arbitration laws so that a litigant claiming violation of federal warranty law could not be forced to arbitrate their claims under the Federal Arbitration Act. The Court concluded on several grounds that Maryland state law controlled despite the choice of law provision that South Dakota law controlled.
The Court concluded that despite a majority of federal courts that have ruled that federal arbitration laws prevail over federal warranty law so that the warranty claims must be arbitrated, Gateway cited not a single South Dakota case for that proposition and argued only that the South Dakota Supreme Court would side with the majority of federal trial court and appeals decisions from other circuits and would uphold the arbitration clause.
The Maryland appeals court disagreed, and refused to accept a "headcount" of federal cases by the defendant as conclusive proof of how the South Dakota court would rule. Maryland case law contains a different rule. "In Pope v. State, 284 Md. 309, 320 (1979), the Court of Appeals citing Article 2 of the Maryland Declaration of Rights, said that 'unlike decisions of the Supreme Court of the United States, decisions of federal circuit courts of appeals construing the federal constitution and acts of the Congress pursuant thereto, are not binding upon us.' See also Dregen v. State, 352 Md. 400, 414, n.8 (1999); Lone v. Montgomery County, 85 Md. App. 477, 494 (1991)."
The court continued as follows:
Embracing the rule set forth in the Restatement (Second), Maryland appellate courts have long recognized the ability of parties to specify in their contracts which state's law will apply. Jackson v. Pasadena Receivables, Inc., 398 Md. 611, 617 (2007). The Court of Appeals has required the existence of a "strong" public policy to override a choice-of-law clause in a contract, id. at 621, and has not hesitated to apply out-of-state law, even where it would trump an act of the General Assembly. Id. at 627. However, it is difficult to think of a stronger or more fundamental public policy than one expressed in the State Constitution. Nor can we conceive of a more forceful statement of the duty of a state court than found in Article 2 of the Declaration of Rights. Unlike the oath for State office contained in Article I, §9 of the Maryland Constitution, which requires a judge to "support" the laws of the State, Article 2 expressly mandates that "judges of this State" are "bound" by federal law, notwithstanding "anything in the Constitution of Laws of this State to the contrary."20 Moreover, in the absence of a controlling decision of the U.S. Supreme Court, Maryland courts are to "decide federal questions the way they believe theSupreme Court would decide them," Donald Ziegler, Gazing at the Crystal Ball: Reflections on the Standards State Judges Should Use to Ascertain Federal Law, 40 Wm & Mary L. Rev.1143, 1177 (1999), not the way some federal courts have. Pope, supra, 284 Md. at 320. That is particularly true of a federal question like that presented in Koons Ford, which had divided courts around the country. To adopt appellees' position that a decision of Maryland's highest court on a federal question dissolves because of another state's opposing interpretation of federal law, or because of a headcount of federal appellate or district court decisions on the subject, would require Maryland courts to decide a federal question contrary to the way they believe the Supreme Court would have decided it. This would fly in the face of Article 2 of the Declaration of Rights. Thus, we conclude that embracing a decision of another state or a federal court disagreeing with Koons Ford, would, in the words of §187(2)(b) of the Restatement (Second), "be contrary to a fundamental policy of [this] State.
Indeed, although the case is somewhat complicated procedurally, it is amazing that the plaintiff, a non-lawyer, mustered the law and arguments together to prevail before the Maryland Court of Special Appeals. More importantly, though, is the fact that the arbitration provisions in many credit card and loan agreements are controlled by out-of-state law. To the extent a warranty or choice of law provision is implicated in a dispute involving malfunctioning goods that come with warranties or have end user agreements with arbitration provisions, consumers should take a lesson from the plaintiff in Henry v. Gateway and do their homework before caving in to the legal arguments of big corporations and their attorneys.
Barrington D. Henry v. Gateway, Inc., No. 0537, Sept. Term 2008.
For more information about this case or claims for breach of warranty or product defects, please contact the lawyers at Belsky,Weinberg & Horowitz.