Simply Wireless, Inc. v. T-Mobile US, Inc.
877 F.3d 522
| 4th Cir. | 2017Background
- Simply Wireless (plaintiff) and T‑Mobile (defendant) entered a 2012 co‑marketing agreement (HSN/QVC Agreement) that included a broad arbitration clause and expressly incorporated the JAMS Comprehensive Rules; the agreement also stated the Federal Arbitration Act (FAA) would govern arbitrability.
- In 2014 T‑Mobile filed USPTO trademark applications for SIMPLY PREPAID and began using that mark; Simply Wireless opposed those registrations and later sued T‑Mobile in federal court for trademark infringement and related claims.
- During USPTO/Trademark Board proceedings, the parties conducted extensive discovery; neither party demanded arbitration at that forum.
- T‑Mobile moved to dismiss and compel arbitration, arguing (1) Simply Wireless’s claims fall within the HSN/QVC arbitration clause and (2) incorporation of the JAMS Rules clearly and unmistakably delegates arbitrability issues to an arbitrator.
- The district court found the claims arbitrable and dismissed the suit without prejudice to allow arbitration; the Fourth Circuit majority agreed arbitration was appropriate but held the district court erred by deciding arbitrability itself because the parties clearly and unmistakably delegated that question to the arbitrator via incorporation of the JAMS Rules.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability (court vs. arbitrator)? | Court should decide; arbitration clause language alone doesn’t clearly delegate arbitrability to arbitrator. | Incorporation of JAMS Rules (which vest arbitrators with jurisdiction/arbitrability authority) clearly and unmistakably delegates arbitrability to arbitrator. | Incorporation of JAMS Rules in a commercial contract is clear and unmistakable evidence that arbitrability questions go to the arbitrator; district court erred by deciding arbitrability. |
| Are Simply Wireless’s trademark claims arbitrable under the HSN/QVC Agreement (scope)? | Claims do not “arise out of or relate to” the Agreement; they concern independent trademark rights and would exist without the Agreement. | Claims relate to the Agreement because the Agreement addresses marks and T‑Mobile’s defenses invoke rights under the Agreement. | Court did not decide scope on the merits; because arbitrability is delegated to arbitrator, arbitrator (not court) should determine scope. The panel nonetheless affirmed dismissal on alternate ground (letting arbitrator decide). |
| Is there a “wholly groundless” exception to enforcing delegation? | If T‑Mobile’s arbitrability demand were wholly groundless, court should refuse enforcement; Simply Wireless asserted waiver/fraud/estoppel arguments. | Delegation stands unless claim of arbitrability is wholly groundless; T‑Mobile’s demand was not shown to be wholly groundless. | The majority applied the exception: because Simply Wireless did not show T‑Mobile’s arbitrability assertion was wholly groundless, delegation must be respected. |
| Effect of FAA clause in agreement stating FAA governs arbitrability | The separate FAA clause supports judicial resolution of arbitrability rather than delegation to arbitrator. | FAA clause does not negate JAMS incorporation; parties adopted JAMS rules which delegate arbitrability. | Dissent would treat FAA clause as undermining clear delegation; majority rejected that view and held JAMS incorporation controls. |
Key Cases Cited
- Cruz v. Maypa, 773 F.3d 138 (4th Cir. 2014) (standard of review for Rule 12(b)(6) dismissal)
- Peabody Holding Co. v. United Mine Workers, 665 F.3d 96 (4th Cir. 2012) (two‑step arbitrability analysis: who decides, then scope)
- Rent‑A‑Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (parties may contract to have arbitrator decide gateway arbitrability questions)
- AT&T Techs., Inc. v. Communications Workers, 475 U.S. 643 (1986) (absent clear and unmistakable evidence, courts decide arbitrability)
- Carson v. Giant Food, Inc., 175 F.3d 325 (4th Cir. 1999) (broad arbitration clauses alone do not clearly delegate arbitrability)
- Belnap v. Iasis Healthcare, 844 F.3d 1272 (10th Cir. 2017) (incorporation of JAMS Rules constitutes clear and unmistakable delegation of arbitrability to arbitrator)
- Howsam v. Dean Witter Reynolds, 537 U.S. 79 (2002) (distinguishing questions of procedural arbitrability; presumption favors judicial resolution of whether parties agreed to arbitrate)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (courts should not assume parties agreed to arbitrate arbitrability absent clear and unmistakable evidence)
- Wachovia Bank, N.A. v. Schmidt, 445 F.3d 762 (4th Cir. 2006) (broad "arising out of or relating to" arbitration clauses and the "significant relationship" test)