Johnson v. Walmart, Inc.

When substantial evidence supports that two contracts are separate, independent agreements, an arbitration agreement consented to for an initial purchase “does not control the [second] agreement of the parties.” Int’l Ambassador Programs, Inc. v. Archexpo, 68 F.3d 337, 340 (9th Cir. 1995).

 Johnson and others purchased tires from Walmart.com and agreed to the “Terms of Use,” which included a mandatory arbitration provision. During installation at a Walmart Auto Care Center, Johnson purchased a lifetime tire balancing and rotation service agreement. Walmart denied service and Johnson commenced a class action against Walmart for breach of contract and good faith and fair dealing. Walmart, Inc. (“Walmart”) appealed the denial of its motion to compel arbitration, arguing that Johnson’s in-store tire services purchase were subject to the arbitration agreement from the Terms of Use, because the two purchases were “interrelated contracts in an ongoing series of transactions[.]” Int’l Ambassador Programs, Inc. v. Archexpo, 68 F.3d 337, 340 (9th Cir. 1995). The FAA limits the role of the judiciary “to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). The Court found that the “service agreement” was separately negotiated and entered into from the “Terms of Use” agreement and the contracts involved separate consideration. As such, the Court held that a valid agreement to arbitrate did not exist because the two contracts were separate, independent agreements. Further, the arbitration agreement in the first does not apply to disputes arising from the second. AFFIRMED.