National Auto Lenders, Inc. v. Syslocate, Inc., et al

Filing

Opinion issued by court as to Appellants DriveOK, Inc., Procon, Inc. and Syslocate, Inc.. Decision: Affirmed. Opinion type: Non-Published. Opinion method: Per Curiam.

Case: 10-10869

Date Filed: 07/11/2011

Page: 1 of 5

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
________________________ U.S. COURT OF APPEALS
No. 10-10869
________________________

ELEVENTH CIRCUIT
JULY 11, 2011
JOHN LEY
CLERK

D.C. Docket No. 1:09-cv-21765-MGC
NATIONAL AUTO LENDERS, INC.,
a Florida corporation,
lllllllllllllllllllll

Plaintiff - Appellee,

versus
SYSLOCATE, INC.,
a Delaware corporation,
DRIVEOK, INC.,
a California corporation,
PROCON, INC.,
a Tennessee corporation,
individually and as successor in interest
to Syslocate, Inc., and DriveOK, Inc.,
lllllllllllllllllllll

Defendants - Appellants.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(July 11, 2011)

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Date Filed: 07/11/2011

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Before BARKETT and WILSON, Circuit Judges, and WALTER,* District Judge.
PER CURIAM:
SysLOCATE, Inc., DriveOK, Inc., and Procon, Inc. (together,
“Defendants”), appeal the district court’s denial of their motion to dismiss or to
transfer venue, stay proceedings, and compel mediation and arbitration. We
affirm.
SysLOCATE sold 2,450 GPS1 units to National Auto Lenders, Inc.
(“National”),2 which were installed in cars on which National held liens so that
National could track the cars’ locations through SysLOCATE’s website. National
alleged that the units were defective and then began settlement negotiations with
SysLOCATE. Negotiations stalled, and thereafter SysLOCATE included on its
website end-user licence-agreements (“EULAs”) that National employees had to
“click through” and “accept” before using the SysLOCATE website to track the
working GPS units. These EULAs contained forum-selection and arbitration
clauses. When SysLOCATE posted the first EULA in 2008, National executives

*

Honorable Donald E. Walter, District Judge for the Western District of Louisiana,
sitting by designation.
1

“GPS” is the common term and abbreviation for a “global positioning system.” GPS is
a technology used to remotely determine the location of a given object using a sensor that is
tracked by satellites.
2

SysLOCATE partnered with DrikeOK to sell the units, but for convenience, and because
Procon ultimately acquired both SysLOCATE and DriveOK, we will refer only to SysLOCATE.
2

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instructed their employees not to use the SysLOCATE website and informed
SysLOCATE that only three executives were authorized to bind National to such
an EULA: Asbel Perez, Ozzie Ramos, and Knox North. Nonetheless, after Procon
acquired SysLOCATE and in 2009 posted a second EULA to which National
objected, National employee Ralph Long used the Procon website and clicked on
the “acceptance” button of a third EULA. National executives were not even
aware of this third EULA, but Long’s acceptance of this EULA is the basis on
which Defendants argue that their motion to compel mediation and arbitration
should have been granted.
The district court found, among other things, that Long’s online acceptance
of the EULA did not bind National, in large part because, before the 2009 EULAs
were posted, National had specifically notified Defendants that only certain
executives were authorized to bind National for legal issues related to the dispute
over the defective GPS units. As part of its reaction to the first EULA, National
sent an email asking SysLOCATE to terminate National’s access to their website:
This email constitutes a formal notification that an acceptance of the
EULA by an NAL [National] user or subaccount user is not a valid
acceptance by National Auto Lenders as no user or subaccount user is
authorized by NAL to accept the EULA in NAL’s behalf.
Nonetheless, Defendants argue that they reasonably relied on Long’s apparent
authority to bind National and that this reliance was reasonable because, with
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National’s awareness, Long corresponded with them about the terms of other
related agreements and held himself out as a “manager.”
We find no error in the district court’s resolution of this case. Even
assuming that Long had apparent authority to enter into some agreements on
National’s behalf as a result of past dealings or his title, the vigilance with which
National guarded against subsequent EULAs affecting its rights in the dispute
over the allegedly defective SysLOCATE GPS units makes reliance on any
employee’s apparent authority regarding that dispute unreasonable. As we have
noted, a party’s reliance on an agent is unreasonable when that party has “been
confronted with circumstances adequate to put him on inquiry as to the legitimacy
of the agent’s authority.” Am. Lease Plans, Inc. v. Silver Sand Co. of Leesburg,
Inc., 637 F.2d 311, 314 (5th Cir. 1981).3 Over the course of settlement
negotiations, National had consistently rejected any new agreements that could be
used as defenses to claims regarding the SysLOCATE GPS units and stated that it
would not accept such an agreement. National had clearly informed Defendants
that only certain executives could bind the company and that communications
about the dispute over the defective units must go through counsel. Defendants

3

In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), this
Court adopted as binding precedent all of the decisions of the former Fifth Circuit handed down
prior to the close of business on September 30, 1981.
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cannot retrospectively alter the terms of a sale by slipping into a website’s EULA
provisions that National has stated it would not accept and that its employees
lacked authority to accept.4
In sum, we find that National did not agree to arbitrate this dispute, nor to
litigate in any particular forum. Accordingly, we affirm the district court’s order
denying Defendants’ motion to dismiss or transfer venue and compel mediation
and arbitration.
AFFIRMED.

4

Defendants’ alternative claim that National ratified either the second or third EULA
likewise fails. “Before ratification will be implied of an act of an unauthorized agent it must be
made to appear that the principal has been fully informed and that he has approved.”
Frankenmuth Mut. Ins. Co. v. Magaha, 769 So. 2d 1012, 1021 (Fla. 2000) (quoting Ball v. Yates,
29 So. 2d 729, 732 (Fla. 1946)). Here, though, National immediately objected to the second
EULA, and Defendants offer no evidence that National’s executives were aware of the third
EULA until after this litigation began. Thus, the ratification doctrine is inapplicable.
5