Patton v. Johnson
915 F.3d 827
1st Cir.2019Background
- In 2007 Patton retained Johnson Law Firm (JLF) and Stephen M. Johnson under an Attorney Representation Agreement (ARA) that contained uninitialed arbitration paragraphs; Barry Johnson (the appellant) later joined JLF as an employee and worked on Patton's case.
- After settlement in 2015, disputes arose about alleged misrepresentations and fees; Barry Johnson anticipated a malpractice suit and pursued separate efforts to compel arbitration.
- JLF initiated a JAMS arbitration in Texas; the JAMS arbitrator ruled (Nov. 15, 2016) the ARA’s uninitialed arbitration clause was not a valid, enforceable arbitration agreement, and dismissed the proceeding.
- Patton then sued Barry Johnson and others in Rhode Island state court (removed to federal court). Barry Johnson filed motions to compel arbitration in multiple fora, at times relying on a 2013 employment agreement (which Patton was not party to) and later relying solely on the ARA.
- The Rhode Island magistrate applied Rhode Island collateral estoppel to bar Barry Johnson from relitigating arbitrability because he was in privity with JLF and the JAMS arbitrator had properly decided arbitrability; the district court adopted that recommendation and denied the motion to compel arbitration.
- On appeal Barry Johnson argued the arbitrator lacked authority to decide arbitrability and that Texas law (not Rhode Island law) governed preclusion; the First Circuit affirmed, applying Rhode Island collateral estoppel principles and holding preclusion appropriate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid arbitration agreement exists in the ARA | Patton: ARA’s uninitialed arbitration paragraphs are invalid; prior arbitrator so held | Johnson: ARA arbitration clause can bind Patton and thus require arbitration of malpractice claims | Held: JAMS arbitrator decided there was no valid arbitration agreement and that decision is entitled to preclusive effect under Rhode Island law |
| Whether the first JAMS arbitrator had authority to decide arbitrability | Patton: Parties submitted arbitrability to arbitrator; JAMS rules apply | Johnson: Texas court decision or lack of agreement to delegate meant arbitrator lacked jurisdiction | Held: Parties (including JLF) treated arbitrability as for the arbitrator; clear and unmistakable consent found; arbitrator had authority |
| Whether collateral estoppel bars relitigation of arbitrability | Patton: Yes — issue was actually litigated, final, and Johnson is in privity with JLF | Johnson: Collateral estoppel inapplicable because arbitrator lacked jurisdiction and Texas law should control | Held: Rhode Island collateral estoppel applies (party invited that choice); identity of issues, finality, privity satisfied; estoppel barred relitigation |
| Choice of law for preclusive effect of unconfirmed arbitral award | Patton: Apply Rhode Island law (agreed below) | Johnson: Texas law should apply on appeal | Held: Johnson waived challenge to Rhode Island law by inviting its use below; court applied Rhode Island collateral estoppel law |
Key Cases Cited
- PowerShare, Inc. v. Syntel, Inc., 597 F.3d 10 (1st Cir.) (magistrate judge review standards and dispositive vs. non-dispositive motions)
- InterGen N.V. v. Grina, 344 F.3d 134 (1st Cir.) (elements required to compel arbitration)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (United States Supreme Court) (standard for allocating arbitrability to arbitrators; clear and unmistakable proof required)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (United States Supreme Court) (distinction between gateway arbitrability issues and delegation; courts look for clear and unmistakable evidence)
- Wolf v. Gruntal & Co., 45 F.3d 524 (1st Cir.) (preclusion principles and limits when prior forum lacked jurisdiction; unconfirmed arbitration awards and preclusion)
- Phinney v. Wentworth Douglas Hosp., 199 F.3d 1 (1st Cir.) (standard of review for magistrate findings on non-dispositive matters)
- Robb Evans & Assocs., LLC v. United States, 850 F.3d 24 (1st Cir.) (issue preclusion doctrine overview)