Mance v. Mercedes-Benz Case Study

Introduction

In the case of Mance v. Mercedes-Benz, the court argued that arbitration provision for this specific case was highlighted, apparent, and not oppressive, and it should not have taken Mr.Mance by surprise. However, he argued that the binding arbitration would leave him with limited appeal rights. But conclusiveness is one of the main objectives of arbitration. According to the US District Court, the arbitration clause was enforceable (Mance v. Mercedes-Benz USA, LLC, No. 3:2011cv03717, 2012). Therefore, it granted the Mercedes Benz motion to compel arbitration. Thus, the court ruled that the arbitration agreement was binding. The matter could only be resolved through non-judicial or out of court resolution.

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I suggest for the change in arbitration clause so that it remain non-binding. It is clear that in most cases, binding arbitration tends to favor the seller and not the buyer. The sellers are always aware and experienced when it comes to this clause. But in most of the circumstances, the consumers are caught unaware (Aragaki, 2018). They end up signing the arbitration agreements, which they are not aware or sure of the consequences. Eventually, they end up losing.

Mr. Mance was caught up in such a dilemma in this case. He agreed to the terms of the agreement without knowing the consequences that would follow. But if the arbitration clause was non-binding, then, he could not have lost the case. For non-binding arbitration, the results would not have carried any legal precedence, and the parties could not be bound by law to follow the results. Non-binding arbitration would be the best alternative to eliminate the issues in these cases moving forward.

Henry Schein v.Archer and White Sales, Inc. is another case that used an arbitration clause to deal with a breach of contract.Archer and Whites Sales Inc. entered into a contract to sell products which were produced by Henry Schein Inc. Eventually, the relationship between these two firms deteriorated. The Archer and Whites sued for antitrust violations requesting injunctive relief and monetary damages from the federal district Court of Texas.

The contract between these two firms contained an arbitration agreement. The agreement provided that any legal dispute between the two firms would be resolved via arbitration and not by the court system (Henry Schein, V. Archer & White Sales, Inc. | US Law | LII / Legal Information Institute, 2019). According to this particular agreement, arbitration was not needed when seeking injunctive relief as well as disputes related to trademarks, trade secrets as well as other intellectual property.

According to arguments by Archer and Whites, the two companies sought an injunction, as their case was an exception and was not compelled to any arbitration proceedings. Both the District Court and the Fifth Circuit Court of Appeal agreed. Eventually, Henry Schein appealed to the Supreme Court. He stated that the FAA permits an arbitrator to determine whether the antitrust count should be subject to the arbitration clause regardless of exceptions.

The Supreme Court made a unanimous decision about this case. The court reversed the decisions of district and appeal courts. It stated that the FAA should be strictly interpreted and enforced unless the contract states clearly otherwise (Henry Schein, V. Archer & White Sales, Inc. | US Law | LII / Legal Information Institute, 2019). Justice Brett Kavanagh, in the first opinion of the court, noted that the court has to respect the Parties decisions embodied in the contract. The contract did not include any exception to the arbitration clause in the case of antitrust suits. Therefore, it would be impossible for the Supreme Court to allow the case to be exempt from the mandatory arbitration.

The arbitration clause is not ethical. In most cases, the seller set rules and controls the arbitration procedure. Eventually, the clause ends up being advantageous to that person. According to the theory of justice, the decision-makers should always make decisions that should focus on appropriate actions to the parties involved. The ethical choices are supposed to be consistent with ethical theory.

The consumers are only allowed to present claims based on the rules that the seller sets out. The seller also appoints the third party who will chair the arbitration process, this way, and the judgment in most cases favors the seller (Aragaki, 2018). Their arbitration process is, therefore, biased towards the seller. Consequently, it becomes unethical for the sellers to restrict the consumers' choice of setting disputes through the arbitration process.

The arbitration clause does not follow the requirement of Justice Theory. According to the theory, those who choose to engage in social cooperation have to decide together in one joint act Vaughn, 2015). The arbitration clause gives way for one Party to set out arbitration rules which the other Party has to follow if he/she agrees to the terms (Aragaki, 2018). This leaves buyers a room to be exploited by the seller. For example, in the case of Mance vs. Mercedes Benz, the buyer was not well informed when it comes to consequences that would arise in this agreement. That is the reason why he went to court, but unfortunately, the arbitration was enforceable.

More so, Mercedes Benz Company's actions were legal but unethical. According to Immanuel Kant's Deontological ethics, actions are not right or wrong based on their result but instead because they are inherently good or evil (Chandler, 2019). The case of Mr. Mance V. Mercedes Benz can be argued using this theory. It is unethical for the company to sell a faulty vehicle, and fails to repair as agreed. Mr. Mance had purchase vehicle, which was unable to function as intended, but the company was unable to repair it as agreed. Here, Mercedes Benz company could have either repaired or replaced the vehicle. It could not have caused Mr.Mance to suffer, to the extent of going to court to seek the remedy. It's like the company took advantage of the enforceability of the arbitration clause and make Mr.Mance suffer unfairly. Therefore, even though the company was right that Mr. Mance had to abide by the arbitration clause, the actions of the company were unethical since it took advantage of the binding arbitration.

References

Mance v. Mercedes-Benz USA, LLC, No. 3:2011cv03717 - Document 34 ( 2012): Justia. (n.d.). Retrieved from https://law.justia.com/cases/federal/district-courts/california/candce/3:2011cv03717/243514/34/

Aragaki, H. N. (2018). Arbitration: Creature of Contract, Pillar of Procedure. Pillar of Procedure (May 3, 2018), 8. Retrieved from https://elibrary.law.psu.edu/cgi/viewcontent.cgi?article=1004&context=arbitrationlawreview

Henry Schein, V. Archer & White Sales, Inc. | US Law | LII / Legal Information Institute. (2019). Retrieved from https://www.law.cornell.edu/supremecourt/text/17-1272

Chandler, R. C. (2019). Deontological Dimensions of Administrative Ethics Revisited. In Handbook of Administrative Ethics (pp. 205-220). Routledge. Retrieved from https://www.taylorfrancis.com/books/e/9780429272738/chapters/10.4324/9781482290042-11

Vaughn, L. (2015). Doing ethics: Moral reasoning and contemporary issues. WW Norton & Company. Retrieved from https://scholar.google.com/scholar?as_ylo=2015&q=justice+theory+of+ethics&hl=en&as_sdt=0,5