Dye v. Tamko, No. 17-14-052 (11th Cir. Nov. 2, 2018) [click for opinion]

Two Florida residents purchased the same type of “Heritage 30” shingles (hereinafter “the shingles”) from Tamko Building Products (“Tamko”) for their respective roofs. The shingles came with a 30-year limited warranty, the language of which was printed in full on the outside wrapper of each shingle package. This limited warranty contained a mandatory arbitration clause that was also printed in its entirety, and in all caps, on the outside of every shingle wrapper. The warranty further specified that any action against Tamko must be arbitrated individually rather than as part of a consolidated or class action.

Both homeowners, after noticing crumbling and crackling of the shingles on their respective roofs, filed a putative class action on behalf of similarly situated building owners (hereinafter, collectively, “the building owners”), seeking damages and declaratory relief. The building owners alleged that Tamko manufactured its shingles with less than the required amount of asphalt necessary to comply with industry standards and building codes, and brought claims for breach of express and implied warranties, strict products liability, negligence, and violation of the Florida Deceptive and Unfair Trade Practices Act. In response, Tamko filed a motion to compel arbitration and an accompanying motion to dismiss or stay proceedings. The district court in the Middle District of Florida granted Tamko’s motion to dismiss, reasoning that through their roofers, the building owners had accepted the terms of Tamko’s purchase agreement, including the mandatory arbitration provision.

On appeal, the Eleventh Circuit first affirmed that the shingle wrappers conveyed a valid offer of Tamko’s contract terms—namely, that any product-related dispute must proceed through arbitration. Citing Florida law, the court took note that the purchase terms were printed in full on the outside packaging, and were accompanied by capital letter text alerting purchasers to read the language of the agreement carefully before opening the packaging. The court held that Tamko’s packaging therefore provided “conspicuous notice of its offer,” and therefore constitutes what a “reasonable, objective person would understand as an invitation to contract.”

Second, the court affirmed that unwrapping and retaining the shingles was an objectively reasonable means of accepting the offer conveyed by the shingle packaging. Citing two prior “shrinkwrap” cases, the court concluded that the acts of opening and retaining constitutes conduct from which assent to the warranty terms could be inferred. In dismissing the building owners’ argument that shrinkwrap precedent is inapplicable, the court conceded that there are differences between shingles and the types of software products typically at question in shrinkwrap cases, including the size of the packaging and the fact that software products are typically delivered directly to end users. However, the court concluded that in any event, it should “hardly come as a surprise to modern consumers” that even “big-box items” come with purchase terms and conditions.

Third, and finally, the court dismissed the building owners’ argument that even if there was a valid offer, the roofers accepted it, not the building owners. The court pointed out that the building owners expressly delegated to their roofers the task of purchasing shingles in the course of the agency relationship between the roofers and building owners. Therefore, concluded the court, such express authority granted by the building owners to the roofers to buy and install shingles necessarily included acceptance of the printed purchase terms on the building owners’ behalf.

A version of this post originally appeared in the January 2019 edition of Baker McKenzie’s International Litigation & Arbitration Newsletter, which is edited by David Zaslowsky and Grant Hanessian.

 

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