Opinion for the Court filed by Chief Judge HARRY T. EDWARDS.
The instant litigation involves a claim of employment discrimination filed by the ap-pellee, Emmanuel Bailey, against the appellant, Federal National Mortgage Association (“Fannie Mae” or “employer”). In response to Mr. Bailey’s complaint, Fannie Mae filed a motion to stay litigation pending arbitration. The District Court denied the motion to stay, and Fannie Mae now aрpeals.
This case presents a new twist to an old problem. In Cole v. Burns Int’l Sec. Servs.,
Fortunately, we do not have to decide this troublesome question. The issue was not raised before the trial court, because Fannie Mae disсlaimed any intention of terminating Mr. Bailey if he persisted in his refusal to arbitrate the instant dispute. Fannie Mae contends only that its motion to stay should be granted because Mr. Bailey implicitly agreed to arbitrate statutory claims of employment discrimination when he continued to work for the employer after the issuance of the Dispute Resolution Policy. Mr. Bailey, in turn, claims that he never gave his assent to be bound by the employer’s new arbitration policy. Mr. Bailey claims further that he made it clear to Fannie Mae that he did not subscribe to the employer’s new arbitration policy.
The District Court denied Fannie Mae’s motion to stay, finding that, because there was no meeting of minds between the parties, there was no arbitration agreement to enforce. We can find no error in the judgment of the District Court. Accordingly, we affirm.
On March 12, 1998, Mr. Bailey filed a memorandum with Fannie Mae’s Office of Corporate Justice requesting an investigation of various allegations of race and gender discrimination. In this memorandum, labeled a “Formal Complaint,” Mr. Bailey stated:
Pursuant to the Fannie Mae Employee Handbook, I hereby submit a Formal Complaint with respect to the aforementioned violations of all applicable United States and District of Columbia Laws and the Fannie Mae Affirmative Action Plan. Further, I hereby retain all redress options available to me under the Equal Employment Opportunity Commissions (EEOC) [sic] and the United States and/or Local Court System.
Request for Formal Investigation, reprinted in Joint Appendix (“J.A.”) 39.
Fannie Mae had announced in January 1998 that it would issue a new arbitration policy on March 16, 1998. Subsequently, on March 16, 1998, as promised, Fannie Mae issued a Dispute Resolution Policy, which required employees to pursue job-related claims internally, through arbitration, before such claims could be presented to a court of law. In particular, the Dispute Resolution Policy stated that, as of March 16,1998,
the Policy becomes a condition of employment for all Fannie Mae employees. This means that, by starting or continuing work for Fannie Mae on or after that date, each employee is indicating that he or she accepts the Policy as a condition of employment and agrees to be bound by it.
Dispute Resolution Policy at 1, reprinted in J.A. 106.
Mr. Bailey never said anything to any official at Fannie Mae to indicate that he acceded to the Dispute Resolution Policy, and he never signed any agreement to that effect. And Mr. Bailey never did or said anything to withdraw the position stated in his March 12 complaint, in which he reserved the right to pursue statutory claims with the EEOC and in federal or state court. Indeed, on March 30, 1998, after the Policy was issued, Mr. Bailey’s counsel sent a letter to Fannie Mae asserting that
Mr. Bailey’s [March 12] Complaint was directed to [the employer] on that date specifically to avoid the effective date on March 16 of a new corporate policy that might have mandated arbitration of Mr. Bailey’s issues.
Letter from Pamela J. White to Stasia Kelly (Mar. 30, 1998), reprinted in J.A. 70-71. On May 8, 1998, after an exchange of correspondence between the parties over Mr. Bailey’s refusal to be bound by the new arbitration policy, Mr. Bailey’s counsel sent another letter to Fannie Mae to reiterate her client’s position:
Mr. Bailey retained “all redress options” available to him with the courts or EEO administrative agencies and, thus, rejected Fannie Mae’s new mandatory arbitration policy effective March 16, 1998. Furthermore, with or without regard to the filing date and pendency of his Complaint, Mr. Bailey does not agree to be bound by the new “Dispute Resolution Policy.”
Letter from Pamela J. White to Dawn P. Marcelle (May 8, 1998), reprinted in J.A. 186. In response to this last letter, Fannie Mae’s counsel sent a letter to Mr. Bailey’s attorney, reiterating the employer’s position and reassuring Mr. Bailey that he was in no threat of lоsing his job:
Fannie Mae had not previously understood that Mr. Bailey had already decided that he would not be bound by the Dispute Resolution Policy. As you know, Fannie Mae considers Mr. Bailey to be bound by that Policy with respect to the complaint that he made on March 12, 1998. In the event that an employee disregards the Policy, Fannie Mae would enforce it by seeking appropriate judicial relief. As Fannie Mae previously told employees, it will not terminate them for failing to follow the Policy.
Letter from Fannie Mae to Pamela J. White, reprinted in J.A. 190.
On May 21, 1999, the District Court denied Fannie Mae’s motion, finding that Mr. Bailey had effectively rejected the possibility of arbitration when he filed his complaint with Fannie Mae on March 12, 1998. Fannie Mae then filed this appeal pursuant to 9 U.S.C. § 16(a)(1) (1994).
II. Discussion
A The Standard of Review
Normally, the determination of intent is a question of fact. See Pullman-Standard v. Swint,
In Pullman-Standard, the Court applied Rule 52(a) to review a lower court’s determination that the differential impact of a seniority system reflected an intent to discriminate racially. The Court expressly repudiated the view that facts could be put into distinguishable categories (i.e., either subsidiary or ultimate) in determining whether Rule 52(a)’s clearly erroneous standard of review should apply. See Pullman-Standard,
In United States v. Microsoft Corp.,
The problem here is complicated even more, because this is not a case in which the parties disagree over the meaning of an existing agreement. Rather, the legal battle here is over the existence of a contract, not its meaning. In fact, both sides seem to agree that if thе Dispute Resolution Policy constitutes an enforceable agreement, there is no disagreement over the meaning of the arbitration policy. The District Court found that Mr. Bailey never assented to the new arbitration policy. We must now decide whether the District Court’s decision on this question is subject to deferential review under Rule 52(a).
One of our sister circuits has held that an appellate court engages in de novo review when considering a district court’s order denying a stay of a federal suit pending arbitration pursuant to 9 U.S.C. § 3. See, e.g., Riley Mfg. Co. v. Anchor Glass Container Corp.,
The D.C. Circuit has yet to address this precise question. In Gardner v. Benefits Communications Corp.,
Now that we must squarely face the issue, we hold in accord with the Second Circuit
that the determination that parties have contractually bound themselves to arbitrate disputes — a determination involving interpretation of state law — is a legal conclusion subject to our de novo review, ... but that the findings upon which that conclusion is based are factual and thus may not be overturned unless clearly erroneous.
Chelsea Square,
B. The Parties Never Agreed to Contractually Bind Themselves to Arbitrate
Fannie Mae had аnnounced in January 1998 that it would issue the new arbitration policy on March 16, so the District Court found that Mr. Bailey “knew this [new] arbitration process was coming” when he filed his complaint with Fannie Mae on March 12, 1998. Trial Tr. at 5, reprinted in J.A. 203. The District Court therefore found that Mr. Bailey “made a timely election against arbitration” when he filed his complaint. Id. at 2, reprinted in J.A. 200. And, most importantly, the District Court found that Mr. Bailey’s internal complaint “clearly signalled] ... that he was intending to invoke his rights to reject arbitration.” Id. at 5, reprinted
Fannie Mae, however, claims that Mr. Bailey’s determination to retain his right to pursue statutory claims before the EEOC and in the courts was not inconsistent with the employer’s policy requiring employees to use arbitration. This assertion is simply wrong. Absent an agreement to arbitrate, an employee is not required to exhaust arbitration as a condition precedent to pursuing his statutory remedies before the EEOC and the courts. Therefore, Mr. Bailey’s so-called “redress options” would be dramatically changed — in terms of cost, time delays, and, possibly, inadequate adjudicatory processes — if he were barred from litigation until after he pursued his claims in arbitration. And, if forced to use arbitration, there is always the possibility that a reviewing court might give some deference to an arbitrator’s findings, arguably to the detriment of a litigant like Mr. Bailey. See Cole,
Quite apart from Mr. Bailey’s complaint and what it signaled to Fannie Mae, there are several other telling facts in the record of this case. It is undisputed that Mr. Bailey never executed any written agreement with Fannie Mae to arbitrate statutory claims of employment discrimination. Indeed, it is uncontested that the parties never purported to reach an understanding by oral agreement. It is also unquestioned that Mr. Bailey never said or wrote anything after Fannie Mae issued its new arbitration policy, either to rescind what he had said in his written complaint or to otherwise indicate that he subscribed to the Dispute Resolution Policy. In fact, after the new policy was issued, Mr. Bailey’s counsel wrote to officials at Fannie Mae to make it clear that Mr. Bailey was not bound to pursue his claims in arbitration.
In short, there are no disputes between the parties over these material facts. The only remaining question, therefore, is whether the District Court erred in concluding that Fannie Mae failed to fulfill its burden of proving that there was an agreement as to all material terms and that bоth parties intended to be bound by the arbitration policy. Whether we apply a de novo standard of review or “clearly erroneous” review under Rule 52(a), it is clear here that the judgment of the District Court must be affirmed.
Fannie Mae persists in arguing that there was an “agreement” between the parties because Mr. Bailey did not unequivocally and effectively voice his opposition to the new arbitration policy. There are two problems with this argument: First, the District Court found otherwise, and that finding is not clearly erroneous. Second, the argument has a false premise. The question here is not whether Mr. Bai
The Supreme Court has instructed in First Options of Chicago, Inc. v. Kaplan,
Under applicable District of Columbia law, “[arbitration is predicated upon the consent of the parties to a dispute, and the determination of whether the parties have consented to arbitrate is a matter to be determined by the courts on the basis of the contracts between the parties.” Ballard & Assocs., Inc. v. Mangum,
In evaluating contract formation, we also look closely at the parties’ intention to be bound. In order to form a binding agreement, both parties must have the distinct intention to be bound; without such intent, there can be no assent and therefore no contract.
Id. (quoting Edmund J. Flynn Co. v. La-Vay,
Fannie Mae’s principal claim is that Mr. Bailey agreed to the new arbitration policy because he did not positively reject it. This is a non sequitur. Even if we accepted the premise — which we do not, because the District Court’s finding to the contrary is not clearly erroneous — it would not follow that Mr. Bailey’s failure to reject a proposal, without more, evidenced his assent to be bound. District of Columbia law clearly requires a “meeting of the minds” as to all material terms for a contract to be formed. There was no “meeting of the minds” in this case, because Mr. Bailey did nothing whatsoever to embrace the employer’s proposal.
Fannie Mae also claims that when Mr. Bailey continued in his job with the employer, this shоwed that he acceded the Dispute Resolution Policy, because the Policy itself was proclaimed to be a “condition of employment.” This, too, is a flawed argument. First, as counsel acknowledged at oral argument, there is a question as to whether Fannie Mae could terminate a current employee solely because of his .or her refusal to accept the new arbitration policy. The Ninth Circuit has held that
the unilateral promulgation by an employer of arbitration provisions in an Employee Handbook does not constitute a “knowing agreement” on the part of an employee to waive a statutory remedy provided by a civil rights law.
Nelson v. Cyprus Bagdad Copper Corp.,
In light of the undisputed facts in this case and the applicable law of the District of Columbia, we are constrained to find that the District Court was correct in rejecting Fannie Mae’s motion to stay litigation pending arbitration.
III. Conclusion
For the foregoing reasons, we affirm the judgment of the District Court.
So ordered.