Of all the federal circuit courts, I was not expecting the 7th Circuit to venture out on a limb to support the NLRB’s interpretation of the National Labor Relations Act (NLRA) as precluding class arbitration waivers.  After all, the 7th Circuit gets affirmed more than other circuit courts by SCOTUS, earning it a reputation for being fairly conservative.  Yet, contrary to the five other circuits that have already disagreed with the NLRB interpretation, the 7th Circuit just became the first to step out in support of the Board’s precedent.

In Lewis v. Epic Systems Corp., 2016 WL 3029464 (7th Cir. May 26, 2016), the arbitration agreement between the employer and its employees called for individual arbitration of disputes and waived “the right to participate in or receive money or any other relief from any class, collective, or representative proceeding.”   Nevertheless, a technical writer (of all the unlikely heroes…) sued the employer in federal court asserting violations of labor laws.  When the employer moved to compel individual arbitration, the employee responded that the arbitration agreement violated the NLRA.   The district court agreed with the employee, and the 7th Circuit affirmed.

Knowing that it was creating a circuit split, the unanimous panel supported its result with as much precedent and analysis as it could muster.  The opinion’s logic is this: Section 7 of the NLRA gives employees the right “to engage in other concerted activities,” and filing class actions constitutes “other concerted activities,” by virtue of federal precedent as well as the statute’s legislative history.  Furthermore, the Board’s interpretation of the NLRA is entitled to deference.  Therefore, the Court held, because the employer forced its employees to agree to a contract that stipulated away the employees’ right to class and collective action, it was unenforceable.

The panel then addressed whether the FAA “overrides” the interpretation of the labor laws.  Finding that the two statutes were not in conflict, the panel rejected any notion that the FAA altered the result.  In particular, the opinion notes that on the whole, the NLRA is very pro-arbitration and therefore does not conflict with the federal policy favoring arbitration.  It then attempts to deal with the pro-class-action-waiver language in Concepcion and Italian Colors by pointing out that: 1) it was dicta, dicta, dicta; and 2) the savings clause in Section Two recognizes that arbitration agreements may be made invalid by other laws.

Would this panel have been so bold if there were not an equally divided 8 justices on the Supreme Court?  I don’t know.  But, I do know that if this decision (and the NLRB precedent) wins the day, and if the recent CFPB proposed regulations are issued and upheld, it will represent a fundamental shift in the use and value of arbitration agreements for large companies that contract with hundreds (or thousands or millions) of employees and consumers at once.

Post script: The 7th Circuit did not persuade the 8th Circuit to change its mind on this issue.  Just a week after the Lewis decision, the 8th Circuit decided Cellular Sales of Missouri v. NLRB, 2016 WL 3093363 (8th Cir. June 2, 2016), in which it reaffirmed its 2013 ruling that the NLRB was simply wrong in concluding that class-action waivers violate the labor laws.  However, the 8th Circuit did affirm the Board’s finding that the company violated the NLRA by drafting an arbitration agreement that would lead a reasonable employee to believe it waived or limited their rights to file unfair labor practice charges with the NLRB.

 

Arbitration is having its 15 minutes of fame.  Thanks to a series in the New York Times, my inbox is full of links to the articles, questions about the information, and fascinating commentary.  [Next time I am in Oakland, I am totally having the “Scalia” cocktail at Italian Colors.]  With the far-reaching audience of the NYT, the policy questions surrounding waivers of class arbitration are no longer just a conversation among in-house counsel, advocates, and law professors, but reached the general water cooler set.  For anyone passionate about arbitration law, it’s like Christmas morning.  Jumping past the merits of the policy questions for a moment, what could happen if the public demands that its representatives take action?

One possibility is that there may be more cases like McLeod v. General Mills, Inc., Case No. 15-494 (D. Minn., October 23, 2015).  In that case, the Chief Judge of the District of Minnesota found that an employee collective action could go forward in court, despite a valid arbitration agreement that demanded individual actions.  Why?  Because language in the Older Workers Benefit Protection Act of 1990 (OWBPA) provides that any worker challenging the validity of a waiver of ADEA (Age Discrimination in Employment Act) rights “shall have the burden of proving in a court of competent jurisdiction that a waiver was knowing and voluntary.”  The court found that the statute’s use of “shall” along with “court” was sufficient to trump the earlier and more general requirement that courts enforce arbitration agreements (in the FAA).  [Some of the workers in the case are just 42, and 44 years old.  Could I really be that close to the definition of an “older worker”??]

Unless there is a wholesale rewriting of the FAA, which seems unlikely, any action to ensure the availability of class and collective actions in court will likely take place one industry or one specific statute at a time.   The CFPB may require that consumers of financial products can bring class actions in court.  And members of Congress may start inserting language like the text of the OWBPA into other statutes designed to protect certain classes of employees and consumers.  Although, in my experience, the most likely outcome is that arbitration’s 15 minutes will pass, and it will go back to something talked about only by lawyers, judges and professors, and nothing will change until the current SCOTUS majority becomes the minority.

One way to challenge the very existence of an agreement to arbitrate is to say that the parties’ contract said nothing about arbitration and did not validly incorporate any other document calling for arbitration.  Oklahoma and Alabama have recently come out at opposite ends of the spectrum in terms of what kind of notice must be given a consumer to incorporate an arbitration agreement from a secondary document.

In Walker v. Builddirect.com Technologies, Inc., 2015 WL 3429364 (10th Cir. 2015), the federal appellate court refused to compel arbitration of a dispute, because under state law the arbitration provision was not incorporated by reference into the contract signed by the parties.   That contract  said it was subject to the seller’s “terms of sale,” but did not list those terms or direct the customer to the website where those terms could be found. The Tenth Circuit had certified the question of whether the website terms were incorporated by reference to the Oklahoma Supreme Court, which found they were not.  For future drafters, the Oklahoma decision notes:

If BuildDirect intended to make the online “Terms of Sale” part of the parties’ agreement, BuildDirect could easily have accomplished that purpose by drafting the Contract employing words of express incorporation or clearly referencing, identifying and directing the Walkers to the document to be incorporated.

Reaching the opposite result, the Supreme Court of Alabama enforced arbitration agreements that were contained in insurance forms that the plaintiffs may never have received. American Bankers Ins. Co. of Fl. v. Tellis, __ So.3d __, 2015 WL 3935260 (Ala. 2015).  The insurance policyholders had received their policies, which allegedly included two supplemental forms containing the arbitration agreement.  The policyholders swore they never received those forms, and, although one form has a signature line, the insurer could not produce any signed versions of the form.  However, because those forms were listed on the declarations page (by numerical code, not a descriptive title), the court found the policyholders had a duty to investigate the content of the forms.  In support of compelling arbitration it held:

In sum, although the policyholders did not execute stand-alone arbitration agreements or necessarily even read or receive the insurance policies containing the arbitration provisions, they have nevertheless manifested their assent to those policies, and, necessarily, the arbitration provisions in them, by accepting and acting upon the policies, inasmuch as they all affirmatively renewed their policies and paid their premiums…

In an easier case, the high court in Maryland allowed an arbitration agreement in one document to require the parties to arbitrate disputes over a second document.  Ford v. Antwerpen Motorcars, Ltd., __ A.3d__, 2015 WL 3937607 (Md. 2015).  In that case, all the documents were signed “on the same day during the course of the purchase and financing of an automobile.”  Although only the “Buyer’s Order” contained an arbitration agreement (the financing agreement did not), the court found the buyers’ claims over the financing must be decided in arbitration because the two documents must be construed together as the entire agreement between the parties.

What do these divergent results mean for drafters of arbitration agreements?  As usual, err on the side of caution.  If you comply with Oklahoma’s requirements of notice, which are not that onerous, you will most certainly be well-positioned in other states.

p.s.  This is my 200th blog post at Arbitration Nation!  Hold off on the streamers and balloons, because my fourth blog-iversary is next month anyhow.

Two parties recently convinced federal circuit courts that the language of their arbitration agreements was not sufficient to compel arbitration of their disputes. Both cases turned on how courts “harmonize” language from different parts of an agreement or from multiple agreements.

The decision from the Eighth Circuit was a pretty easy one. The parties’ contract required them to mediate any dispute. Then it said: “if the dispute is not resolved through mediation, the parties may submit the controversy or claim to Arbitration. If the parties agree to arbitration, the following will apply…” The party fighting arbitration (a city in South Dakota) argued the quoted language does not mandate arbitration, it makes arbitration an option for the parties, so the case should remain in court.

The party seeking arbitration emphasized a sentence at the end of the arbitration paragraph saying that the arbitrator’s “decision shall be a condition precedent to any right of legal action.” It argued that the only way to harmonize that language is to conclude that arbitration is required. The court disagreed, finding that a reasonable interpretation is simply that if the parties decided to arbitrate, the arbitration decision is a condition precedent to further legal action. Quam Construction Co., Inc. v. City of Redfield, __ F.3d___, 2014 WL 5334781 (8th Cir. Oct. 21, 2014). Therefore, the Eighth Circuit affirmed the district court’s denial of the motion to compel arbitration.

The Fifth Circuit had a harder case in Sharpe v. AmeriPlan Corp., __ F.3d__, 2014 WL 5293707 (5th Cir. Oct. 16, 2014). In that case, three former sales directors of a company sued for breach of contract after they were terminated. The company moved to compel arbitration and the district court granted the motion.

Their original employment agreements with the company did not call for arbitration, in fact they set the venue for legal proceedings exclusively in Texas courts. The employment agreements also incorporated a “Policies and Procedures Manual.” The employment agreements could only be modified with written consent of all parties, but the Manual could be unilaterally modified by the company. Years later, the company amended its Manual to provide for mandatory arbitration.

The Fifth Circuit reversed the district court, finding that the new arbitration clause was unenforceable. First, the court concluded that the jurisdiction and venue clauses in the original employment agreements survived the amendment to the Manual, because there was no written and signed change to the employment agreements themselves and because the company had affirmatively relied on the venue clause (calling for Texas courts) when it transferred the case from California to Texas. And second, the court found that the old and new provisions “cannot be harmonized” without rendering the original agreement meaningless.

There are drafting lessons from these cases: if you want to have mandatory arbitration of disputes, the contract must consistently say that, and if you want to modify existing agreements to add arbitration, make sure to honor any language in the original agreement about how that agreement can be amended or modified and be clear what clauses are replaced or superceded.

In recent weeks, four federal and state appellate courts have vacated district court decisions that denied motions to compel arbitration.  The courts seem to be saying to defendants with arbitration agreements: don’t worry if you lose in the trial court, we will be your Tim Howard and save you from the gaping jaws of litigation.  (I have watched *a lot* of World Cup soccer in recent weeks, folks.  That is partly to blame for the huge stack of arbitration cases waiting for me to write about them.  Well, that and the fact that judges all over the nation appear to be churning out opinions at record speed before their law clerks turn into pumpkins in August.)

These are not just run of the mill reversals, either.  One dealt with an issue of first impression and another with a wholesale gutting of twenty years of case law.

In Al Rushaid v. Nat’l Oilwell Varco, Inc., __ F.3d__, 2014 WL 2971701 (5th Cir. July 2, 2014), the plaintiff filed suit against six defendants in August 2011, but could not serve one of them, NOV Norway, until August of 2012, after the other parties had engaged in significant discovery.  NOV Norway moved to compel arbitration within three months of being served the complaint.  The district court denied the motion because a) it found the price quote did not effectively incorporate the terms containing the arbitration agreement, and b) it found NOV Norway waived its right to arbitrate by invoking the judicial process.  On appeal, the Fifth Circuit reversed on both those grounds.  It found the plain language of the price quote did incorporate a general terms and conditions document with an arbitration agreement.  And, as a matter of first impression, it found that even though all the defendants were jointly owned and controlled and represented by the same counsel, the litigation activity of its codefendants could not be imputed to NOV Norway for the purpose of determining waiver.  (The court said the outcome would change if there were a basis to pierce the defendants’ corporate veil or an alter ego situation.)

Dean v. Heritage Healthcare of Ridgeway, LLC, __S.E.2d__, 2014 WL 2771300 (S.C. June 18, 2014), involved wrongful death claims against a nursing home, and the relevant arbitration agreement said that “any arbitration proceeding that takes place under this [] Agreement shall follow the rules of the [AAA]”.  However, the AAA stopped accepting personal injury disputes based on pre-injury arbitration agreements in 2003.  The nursing home moved to compel arbitration and the trial court denied the motion.  It found that the language about the AAA rules meant that the dispute should be heard by the AAA and since the AAA was not available, the arbitration agreement was invalid.  The Supreme Court of South Carolina reversed.  But before the supremes could get to the merits, they had to overrule their own 1993 decision, which held that nursing home contracts did not involve interstate commerce.  After reviewing the intervening cases from SCOTUS, the court found the nursing home agreement does involve interstate commerce and is governed by the FAA.  On the merits, the court found that the availability of the AAA to administer the arbitration was not a material term and instead the parties’ agreement simply calls for the arbitration to be governed by the AAA rules, regardless of what entity administers the proceeding.

In a Texas case, the defendant’s motion to compel arbitration was denied after the trial court found the arbitration agreement was unconscionable because it limited the plaintiffs’ statutory remedies and had a unilateral attorneys fees provision.  While the court of appeals affirmed that result, the Supreme Court of Texas reversed.  Venture Cotton Cooperative v. Freeman, __S.W.3d__, 2014 WL 2619535 (Tex. June 13, 2014).  Importantly, the court held that the agreement’s waiver of aspects of state law was invalid, but that was insufficient to invalidate the entire arbitration agreement.  Instead, it found the “objectionable limitation on the farmers’ statutory rights” should have been severed.  (And the attorneys’ fees provision also was insufficient to invalidate the arbitration agreement.)

Finally, the Third Circuit also just vacated a district court’s decision to deny a motion to compel arbitration in Ross Dress for Less, Inc. v. VIWY, L.P., 2014 WL 2937031 (3d Cir. July 1, 2014).  In that dispute over lease payments, the lease provided (confusingly) that disputes worth less than $50,000 should be arbitrated and those worth more than $50,000 can be litigated or arbitrated at the option of either party.  However, if the tenant withheld rent and the landlord disagreed, the dispute must be determined by an arbitrator.  In this case, their were claims relating to tenant withholding along with other claims worth more than $50,000 and the parties disagreed as to whether they had to arbitrate.  The district court found that the claims were outside the scope of the arbitration clause.  But the Third Circuit looked at the “conflicting lease provisions” and relied heavily on the federal presumption in favor of arbitrability to hold that all issues in the case must be arbitrated.

The primary lesson that can be drawn from these four cases is this: if you have a colorable argument for compelling arbitration, don’t give up if you lose at the trial court level.

In the past few months, two federal appellate courts have had to determine whether parties were bound to arbitrate claims that arose from relationships governed by multiple agreements, only some of which called for arbitration.  While the courts reached different conclusions based on the facts, they both relied on the same critical inquiry: did the agreement containing arbitration create the essential relationship between the parties and would the claims necessarily refer to that agreement?  If so, the claims are arbitrable.

In Robinson Brog Leinwand Greene Genovese & Gluck, P.C. v. John M. O’Quinn & Assocs., No. 12-2915, 2013 WL 1707897 (2d Cir. Apr. 22, 2013), law firms were fighting about whether the Robinson firm was owed money under a joint representation relationship.  Three documents governed their relationship: a “Client Agreement” setting forth the contingency fee rate, defining the clients, and requiring arbitration; a Joint Responsibility Referral Fee Letter Agreement setting forth how the law firms would share attorneys’ fees, without an arbitration agreement; and a Client Consent document that told the clients about the law firms’ joint representation and the fact they were splitting fees.

Robinson started an action in federal court to recover fees, and the defendants successfully moved for dismissal based on its argument that the claims must be arbitrated.  The Second Circuit affirmed.  It found that the Client Agreement was “the foundation of these interdependent documents,” because without an attorney-client relationship there could be no basis for sharing attorneys’ fees.  Robinson argued its claims arose only out of the Joint Letter Agreement, but the court concluded no claims could arise solely from that agreement between the law firms, since it did not “contain an independent means of generating the pool of funds from which those fees would be paid.” Therefore, even though Robinson was not a party to the Client Agreement, the court held it was bound by the arbitration agreement in that document by the doctrine of equitable estoppel.

The Sixth Circuit had recently reached the opposite result by applying similar rationale.  In Dental Associates v. American Dental Partners of Mich., No. 12-1008, 2013 WL 1272086 (6th Cir. March 28, 2013), a group of dentists brought suit for breach of contract and tortious interference against a service provider that had purchased most of their assets.  The defendant, ADPM, had executed two agreements with the plaintiff: an Asset Purchase Agreement (through which its parent company bought many of the plaintiff’s assets) that contained an arbitration agreement; and a Service Agreement detailing the administrative services ADPM would provide to the plaintiff, which lacked an arbitration agreement.  The Service Agreement also required the plaintiff to execute employment agreements with three dentists – those Employment Agreements all called for arbitration of disputes.

The defendant in this case was unsuccessful in dismissing the plaintiff’s claims and compelling arbitration in the district court, and the Sixth Circuit affirmed.  The appellate court stated the relevant rule as: “Where there are multiple contracts between the parties, a dispute is arbitrable pursuant to the arbitration clause in a related contract if ‘the arbitration clause is part of the umbrella agreement governing the parties’ overall relationship.’”  However, even if the umbrella agreement has an arbitration provision, claims can be heard in court if the action can be maintained “without reference” to the umbrella agreement.  In this case, the court concluded that the APA was not an umbrella agreement, because it did not “create the relationship between the parties” and instead governed the “one-time purchase and transfer of assets,” while the Service Agreement defined the ongoing business relationship.  The court also found that the plaintiffs’ claims could be maintained without reference to the APA.

The lesson of these cases for drafters is clear: make sure that any time multiple agreements will function interdependently, their arbitration clauses mirror each other (unless the parties intentionally want some claims to go to court, in which case that should be made explicit).  For litigators, the lesson is that when multiple agreements are at issue, you need to find an argument that the agreement whose arbitration clause (or lack thereof) you prefer is the “foundational” or “umbrella” agreement.

More than one year ago, a three-judge panel of the Ninth Circuit determined that California case law, which precluded arbitration of claims asking for public injunctive relief, was preempted by the Federal Arbitration Act.  Upon rehearing the case en banc, the Court backpedaled.  Kilgore v. KeyBank Nat’l Assoc., __ F.3d __, 2013 WL 1458876 (9th Cir. April 11, 2013).  Ten judges of that Circuit concluded that the California case law simply did not apply to the plaintiffs’ claims, so there was no reason to reach the preemption question.  One judge dissented.

This case involves a class of 120 sympathetic students of a failed flight school, who claim the bank affiliated with the school, which loaned money to the students, violated the California Unfair Competition Law.  All the promissory notes signed by the students contained an arbitration clause that covered their claims and barred anything other than individual arbitrations.  The students asked the court to enjoin the bank from reporting non-payment to credit agencies, from enforcing the notes, and from disbursing any loan proceeds in the future if the consumer credit contract did not comply with FTC regulations.

The bank moved to compel arbitration and the district court denied the motion.  On appeal, a three judge panel of the Ninth Circuit reversed, finding that the FAA preempted California’s Broughton-Cruz rule.  The Broughton-Cruz rule had been developed by the California Supreme Court based on its recognition that the FAA was in conflict with California statutes authorizing public injunctive relief.  Under that rule, claims for monetary relief are subject to arbitration, but claims brought under California statutes that seek injunctive relief for the general public are not subject to arbitration.

When eleven members of the Ninth Circuit reheard the case, however, they left the Broughton-Cruz rule intact.  They were able to dodge the entire preemption analysis by concluding that the injunctions sought by these plaintiffs did not affect enough people to be considered public injunctive relief to trigger the Broughton-Cruz rule.  The majority found the injunction primarily benefited the 120 putative class members.  The majority also concluded that the arbitration agreement was not unconscionable under California law.  As a result, it reversed the district court and remanded with instructions to compel arbitration.

One judge, however, felt strongly that the district court should be affirmed.  The lone dissenter did not analyze the Broughton-Cruz rule, but instead concluded the arbitration agreement was unconscionable under general California law.

Kilgore is significant because it revives the Broughton-Cruz rule.  For everyone else, Kilgore is significant because it shows how skittish courts are about applying Concepcion’s preemption analysis.

 

The Fourth Circuit issued a bold new arbitration decision last week, sending a putative class of shuttle drivers to arbitration while expanding its application of SCOTUS’ Concepcion decision beyond cases involving federal preemption of state arbitration law.  Muriithi v. Shuttle Express, Inc., __ F.3d __, 2013 WL 1287859 (4th Cir. 2013).

Muriithi was a driver for an airport shuttle service who signed a franchise agreement containing an arbitration clause.  The franchise agreement required arbitration of “any controversy arising out of this Agreement,” required that arbitration proceed “on an individual basis only,” and required each party to bear half the “fees and costs of the arbitrator.”  Muriithi later brought employment claims as a representative of a putative class of drivers, arguing they should have been treated as employees entitled to minimum wage and overtime pay instead of labeled as franchisees.

Shuttle Express moved to compel arbitration.  The district court denied the motion, finding the arbitration clause was unconscionable, because plaintiffs could not effectively vindicate their statutory rights due to the class action waiver and fee-splitting provision (and a one year statute of limitation).

The Fourth Circuit reversed the district court, and ordered it to compel arbitration of the drivers’ claims.  The Fourth Circuit could have accomplished that in a fairly simple fashion – by finding that Muriithi did not meet his burden to prove the costs of arbitration would be prohibitive (under the same line of decisions at issue in the AmEx case currently pending before SCOTUS) because he did not present evidence about relevant arbitration fees or the value of his employment claims.  [It could not have hurt that Shuttle Express volunteered during oral argument to pay all arbitration costs if the court compelled arbitration.]

Instead, the Fourth Circuit did that, and then also went out of its way to discuss arguments about whether Concepcion had any application to the case.  The driver argued it did not, because he was not arguing for the application of any state common law that precludes class action waivers in arbitration.  The court disagreed, finding Concepcion applies to any unconscionability argument directed to waivers of class arbitration.  “[T]he Supreme Court’s holding was not merely an assertion of federal preemption, but also plainly prohibited application of the general contract defense of unconscionability to invalidate an otherwise valid arbitration agreement under these circumstances.”

That is a bold statement from the Fourth Circuit, not only because the question presented and ultimate holding in Concepcion were both specific to federal preemption, but also because it adopts the position of the Petitioner in the AmEx case, before SCOTUS has even issued a ruling.

To date, courts have largely limited the impact of the Rent-A-Center decision to arbitration agreements with explicit delegation clauses. But, what if Rent-A-Center applied to every single arbitration agreement that mentioned the AAA rules?  That is a very real possibility, and one which would send almost all arbitrability disputes to arbitrators.

The ­Rent-A-Center decision used “delegation clause” to mean any aspect of an arbitration agreement that authorizes an arbitrator to decide questions about the validity of the arbitration agreement.  Rent-A-Center held that unless a party could allege a fatal flaw in the delegation clause itself, the arbitrator should decide the arbitrability question.  Courts have applied that ruling to explicit delegation clauses like this one: “Any issue concerning … the formation, applicability, interpretation or enforceability of [the arbitration agreement] . . . will be resolved by the arbitrators.”  Rai v. Ernst & Young, LLP, 2010 WL 3518056, at *1 (E.D.Mich. Sept. 8, 2010).  However, not many courts have yet had to struggle with what really constitutes a delegation clause?  Must it be so explicit?

In the 20 years before Rent-A-Center, many federal circuits reached a related decision: that an adoption of the AAA rules clearly and unmistakably demonstrates the intent of the parties to delegate the question of arbitrability to the arbitrator.  That is because the various AAA rules themselves state that the arbitrator has the power to rule on any questions of arbitrability ( the same rule should hold for any forum whose rules delegate that same power).  At least the First, Second, Eighth, Ninth, Eleventh, and Federal Circuits agree in that holding (with only the Third and Tenth Circuits disagreeing).  SCOTUS has never addressed whether adopting the AAA rules clearly and unmistakably delegates arbitrability to the arbitrator. (See case cites at end.)

The question is – how long will it take for these two lines of cases to meld into an airtight zipper that excludes 99% of arbitrability challenges from courts?   Here is how the argument would go: 1) the arbitration agreement at issue calls for application of AAA rules; 2)  federal courts have concluded that the adoption of AAA rules is an unmistakable delegation of arbitrability to the arbitrator; 3) therefore, the sentence mentioning the AAA rules is a “delegation clause”; and 4) Rent-A-Center applies, such that the anti-arbitration party must specifically challenge that delegation clause in order to have the court hear the challenge.

Of course, it may be just that sort of result  — a nearly wholesale denial of the court venue to litigants who challenge their larger arbitration agreement — that will create a five-Justice majority in favor of a less harsh severability doctrine.

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ENDNOTE

Cases holding that the parties’ agreement to arbitrate under AAA rules constitutes a clear and unmistakable delegation of arbitrability to the arbitrator:  Fadal Machining Centers, L.L.C. v. Compumachine, Inc., 2011 W.L. 6254979, *2 (9th Cir. 2011); Fallo v. High-Tech Institute, 559 F.3d 874, 878 (8th Cir. 2009); Terminix Intern. Co., L.P. v. Palmer Ranch Ltd. Partnership, 432 F.3d 1327, 1332 (11th Cir. 2005); Contec Corp. v. Remote Solution, Co., Ltd., 398 F.3d 205, 208 (2d Cir. 2005); Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1372-73 (Fed. Cir. 2001); Apollo Computer, Inc. v. Berg, 886 F.2d 469, 473 (1st Cir. 1989) (relating to ICC, not AAA rules).

Two Circuits have declined to follow the majority.   In Quilloin v. Tenet Health System Philadelphia, Inc., 673 F.3d 221, 225-26, 230 (3d Cir. 2012), the Third Circuit held that the parties “did not agree to arbitrate the issue of arbitrability,” despite agreeing to abide by the procedural arbitration rules of the AAA in their arbitration agreement.  Similarly, in Riley Mfg. Co., Inc. v. Anchor Glass Container Corp., 157 F.3d 775, 780 (10th Cir. 1998), the court held that, although the arbitration agreement in question required submitting to the rules of the AAA, the court could properly resolve the issue of arbitrability.