26 F.4th 1226
11th Cir.2022Background
- Reiterman sued Abid for defamation in April 2018; in June 2018 they executed a settlement that included mutual releases, payment obligations by Reiterman, and an arbitration clause covering disputes "arising out of or relating to this contract."
- After the settlement, Reiterman obtained evidence suggesting Abid authored numerous anonymous blogposts defaming him and suspected three new posts were by her.
- On April 3, 2019 Reiterman’s counsel sent a letter declaring the 2018 Settlement Agreement "null and void" and demanding return of payments; on April 10, 2019 Abid emailed that she would "mirror that belief" and would no longer honor the agreement.
- Reiterman filed suit in September 2019; Abid moved to compel arbitration under the 2018 Settlement Agreement.
- The district court held an evidentiary hearing, found the parties mutually rescinded the 2018 Settlement Agreement (crediting Reiterman’s lawyer, discrediting Abid), denied the motion to compel arbitration, and Abid appealed.
Issues
| Issue | Plaintiff's Argument (Abid) | Defendant's Argument (Reiterman) | Held |
|---|---|---|---|
| Whether a later mutual rescission of a contract containing an arbitration clause is for the court or an arbitrator | Rescission is a state-law challenge to the contract's validity and thus, like other validity defenses, is for the arbitrator | Mutual rescission disputes go to existence/formation of a contract and therefore are for the court to decide before compelling arbitration | The court held rescission affects the contract's existence; courts decide rescission questions and may deny arbitration |
| Standard/procedure for determining existence of an arbitration agreement | District court should apply a summary-judgment–like standard and view evidence in Abid's favor per Bazemore | District court may hold an evidentiary hearing and weigh testimony under the FAA; Bazemore is permissive, not mandatory | The court may choose an evidentiary hearing; Bazemore does not preclude factfinding hearings under 9 U.S.C. § 4 |
| Whether a full trial (jury or bench) was required to resolve rescission | A trial was necessary on the existence issue | FAA requires a jury only if requested; otherwise the court "hear[s] and determine[s]" the issue—an evidentiary hearing suffices | No error: Abid forfeited any trial request and no jury was demanded; the evidentiary hearing (bench-style) complied with the FAA |
| Admissibility of hearsay (private investigator affidavit) and factual findings on rescission | Admission of hearsay was improper and tainted the ruling; factual findings were erroneous | Any hearsay admission was harmless in a bench proceeding; court relied primarily on witness credibility, which is entitled to deference | Any hearsay error was harmless; district court's credibility-based findings were not clearly erroneous and were affirmed |
Key Cases Cited
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (arbitrability and certain validity defenses governed by who decides contract issues)
- Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287 (2010) (courts decide whether a contract exists before compelling arbitration)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (arbitration is a matter of contract and parties can agree who decides arbitrability)
- Dasher v. RBC Bank (USA), 745 F.3d 1111 (11th Cir. 2014) (subsequent agreement that supersedes or replaces earlier agreement can defeat arbitration)
- Wiand v. Schneiderman, 778 F.3d 917 (11th Cir. 2015) (distinguishes challenges to existence, validity of clause, and validity of contract as whole)
- Bazemore v. Jefferson Capital Sys., LLC, 827 F.3d 1325 (11th Cir. 2016) (summary-judgment–style resolution of arbitration-formation issues is an available option)
- Anderson v. City of Bessemer City, N.C., 470 U.S. 564 (1985) (credibility-based factual findings by trial court entitled to great deference)
- Macuba v. Deboer, 193 F.3d 1316 (11th Cir. 1999) (statements otherwise hearsay may be used for impeachment; bench trials reduce prejudicial impact of erroneously admitted evidence)