Ryan D. BURCH, Plaintiff-Appellant, v. P.J. CHEESE, INC., Defendant-Appellee.
No. 13-15042
United States Court of Appeals, Eleventh Circuit.
July 7, 2017
Before TJOFLAT, JILL PRYOR, Circuit Judges, and MOODY, District Judge.
Thomas Francis Talty, Thomas Talty & Associates, BIRMINGHAM, AL, for Plaintiff-Appellant. William Kennedy Hancock, Galloway Scott Moss & Hancock, LLC, BIRMINGHAM, AL, for Defendant-Appellee.
“This is another arbitration dispute in which the parties are litigating whether or not they should be litigating.” Anders v. Hometown Mortg. Servs., 346 F.3d 1024, 1026 (11th Cir. 2003). In this case, an employee sued his former employer for alleged discrimination in violation of several federal statutes. In response, the employer moved the District Court to submit the dispute to arbitration in accordance with an employment contract purportedly signed by the employee. The employee opposed the motion, denying that he signed the agreement. To resolve the factual dispute, the District Court held a bench trial and concluded that the signature was valid. Based on this finding, the Court granted the employer‘s motion to compel arbitration, and dismissed the employee‘s claims without prejudice.
The principal issue on appeal is whether the District Court erred in concluding that a general jury demand in the employee‘s complaint failed to preserve his statutory right to a jury trial under Section 4 of the Federal Arbitration Act,
I.
Ryan D. Burch (“Burch“) began working for P.J. Cheese, Inc. (“P.J. Cheese“)—a franchisee of Papa Johns located in Alabama—in 1999. In September, 2004, Burch was promoted to general manager of P.J. Cheese‘s Fairfield, Alabama location. He worked there until October 14, 2007, when he was asked to turn in his keys.
Roughly two years after the firing, on August 14, 2009, Burch brought this action against P.J. Cheese in the United States District Court for the Northern District of Alabama, seeking relief under an assortment of federal employment statutes. Specifically, Burch alleged that he was paid less than his female co-workers in violation of the Equal Pay Act of 1963,
In response, on October 29, 2009, P.J. Cheese moved the District Court pursuant
On December 11, 2009, the District Court denied P.J. Cheese‘s motion to compel arbitration, concluding that Burch‘s denial created a dispute of material fact over the authenticity of the arbitration agreement, and that he was therefore “entitled
Discovery lasted for approximately ten months. At its conclusion, P.J. Cheese moved for summary judgment on all claims brought in the complaint.5
On March 27, 2013, the District Court ruled on P.J. Cheese‘s motion, granting summary judgment on Burch‘s Family Medical Leave Act and Title VII and Section 1981 claims, but denying it as to Burch‘s Equal Pay Act claim.6
Following the Court‘s ruling on the summary judgment motion, the parties prepared for litigation on Burch‘s remaining claim. At the final pretrial conference, held on July 11, 2013, the parties returned to the question that had been festering in the background for almost four years—should they be litigating the merits of the case at all? Distilled down to its essence, if Burch‘s signature on the arbitration agreement was valid, the answer was no; litigation should be halted, and the proceedings should be referred to arbitration. If the signature was invalid, the answer was yes; the proceedings should continue to a trial on the merits.
Back in 2009, the Court had already ruled that Burch was “entitled to ‘a trial‘” on this signature question. All that remained to be decided in advance of such a trial was who would resolve the question: a jury or the court. The District Court asked the parties to brief the issue.7
Burch argued that the issue should be tried to a jury. Specifically, he contended that Section 4 of FAA grants the party alleged to be in default—in this case, Burch—with a statutory right to a jury trial on disputed issues of fact concerning the “making of [an] arbitration agreement,” and that he invoked this right with the general jury demand in his complaint. His demand was ample, he argued, because
In response, P.J. Cheese argued that the signature issue should be tried to the bench. Although it agreed that Section 4 of the FAA provided Burch with a statutory right to a jury trial on any disputed facts related to the validity of his signature, it
The District Court agreed with P.J. Cheese, holding that Burch‘s failure to request a jury trial on the signature issue “on or before the return day of the notice of application” in accordance with Section 4 of the FAA operated as a waiver of his right to a jury trial on that issue. Following the District Court‘s decision, Burch filed an additional motion contending that P.J. Cheese had waived its right to compel arbitration by failing to demand arbitration prior to the commencement of Burch‘s suit against it and by failing to argue arbitrability in its motion for summary judgment.9 The District Court rejected Burch‘s arguments, concluding that P.J. Cheese only participated in litigation on the merits of Burch‘s claims after being required to do so by court order, and that it had thus not acted “inconsistently with the arbitration right.”10
On September 17, 2013, the District Court tried the signature issue before the bench. After receiving the relevant testimony from the parties, it concluded that Burch had signed the agreement. Based on this finding, it granted P.J. Cheese‘s motion to compel arbitration and dismissed the case without prejudice.
Burch now appeals the dismissal of his complaint,11 contending that the District Court erred by (1) conducting a bench trial on the issue of arbitrability; (2) concluding that P.J. Cheese had not waived its right to arbitration; and (3) failing to proceed to the
II.
In 1925, Congress enacted the FAA “[t]o overcome judicial resistance to arbitration,” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006), and to declare a “‘national policy favoring arbitration’ of claims that parties contract to settle in that manner.” Preston v. Ferrer, 552 U.S. 346, 353 (2008) (quoting Southland Corp. v. Keating, 465 U.S. 1, 10 (1984)). Three sections of the FAA play particularly important roles in achieving that purpose.
When, as in this case, a party moves a district court to compel arbitration under the FAA, the court must first determine whether “the making of the agreement for arbitration or the failure to comply therewith is ... in issue.”
As in a traditional summary judgment motion, an examination of substantive law determines which facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The “threshold question of whether an arbitration agreement exists at all is ‘simply a matter of contract.‘” Bazemore, 827 F.3d at 1329 (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943 (1995)). Thus, just as “state law generally governs whether an enforceable contract exists,” state law generally governs whether an enforceable “agreement to arbitrate exists” as well. Caley, 428 F.3d at 1368. To prove the existence of a contract under Alabama law, the party seeking to enforce the contract must prove by a preponderance of the evidence: “an offer[,] an acceptance, consideration, and mutual assent to terms essential to the formation of a contract.” Shaffer v. Regions Fin. Corp., 29 So. 3d 872, 880 (Ala. 2009).
In this case, the District Court applied this standard and concluded that there was a disputed question of material fact over the existence of an authentic arbitration agreement. In light of this conclusion, it then properly determined that the Court was required—under
A.
The primary issue on appeal is whether the District Court erred in holding a bench trial on the signature issue in spite of Burch‘s general demand for a jury trial in his complaint. We conclude that the District Court did not err.14
A motion to stay court proceedings and compel arbitration is an “equitable defense.”16 Shanferoke Coal & Supply Corp. v. Westchester Serv. Corp., 293 U.S. 449, 452 (1935); Matterhorn, Inc. v. NCR Corp., 763 F.2d 866, 873 (7th Cir. 1985). Thus, as a constitutional matter, a party resisting a motion to compel arbitration, such as Burch in this case, has no right to a jury trial on questions of fact related to the making of an arbitration agreement.
In certain circumstances, the party does, however, have a statutory right to a jury trial on the issue. Specifically,
The propriety of the District Court‘s ruling turns in large part on which statute sets the applicable procedural requirements for demanding a jury trial on issues related to the making of an arbitration agreement:
In the vast majority of civil cases in federal court,
Rule 38 does not apply in every situation, however. Specifically,
Because Burch attempted to invoke his statutory right to a jury trial under Section 4 of the FAA, we must determine whether the provisions of Section 4 provide “other procedures” for demanding a jury trial on the issue of arbitrability. If they do, then the mechanisms detailed in Rule 38 are cast aside and the procedures detailed by the FAA fill the resulting void.
Our inquiry, as always, begins with the statutory text. United States v. Steele, 147 F.3d 1316, 1318 (11th Cir. 1998) (en banc) (“In construing a statute we must begin, and often should end as well, with the language of the statute itself.” (citations omitted)). In relevant part, Section 4 of the FAA provides:
A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court ... for an order directing that such arbitration proceed in the manner provided for in such agreement ... If the making of the arbitration agreement or the failure, neglect, or re-
fusal to perform the same be in issue, the court shall proceed summarily to the trial thereof. If no jury trial be demanded by the party alleged to be in default ... the court shall hear and determine such issue. Where such an issue is raised, the party alleged to be in default may ... on or before the return day of the notice of application, demand a jury trial of such issue, and upon such demand the court shall make an order referring the issue or issues to a jury in the manner provided by the Federal Rules of Civil Procedure, or may specially call a jury for that purpose.
“When the words of a statute are unambiguous ... judicial inquiry is complete.” Conn. Nat‘l Bank v. Germain, 503 U.S. 249, 254 (1992) (quotation marks and citation omitted). Section 4 of the FAA unmistakably provides a specific procedure—apart from those in
Accordingly, we must evaluate whether the general jury demand in Burch‘s complaint complied with the Section 4‘s procedural requirements for demanding a jury trial on an issue related to the making of an arbitration agreement. For the reasons explained below, it did not.
To preserve his statutory right to a jury trial on the making of his arbitration agreement, “the party alleged to be in default“—Burch—was obligated to demand a jury trial of “such issue” “on or before the return day of the notice of application” to submit to arbitration—November 23, 2009.19
B.
The second issue on appeal is whether the District Court erred in concluding that P.J. Cheese did not waive its right to compel arbitration by participating in the litigation of the merits of the case after its motion to compel arbitration had been preliminarily denied. We find no error, and affirm.
A district court‘s ruling on whether a party‘s conduct amounts to waiver of arbitration is subject to de novo review. Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309, 1316 n.18 (11th Cir. 2002). To establish waiver it must be shown that: “(1) the party seeking arbitration substantially participate[d] in litigation to a point inconsistent with an intent to arbitrate; and (2) [that] this participation result[ed] in prejudice to the opposing party.” In re Checking Account Overdraft Litig., 754 F.3d 1290, 1294 (11th Cir. 2014) (quotation marks and citation omitted). “Prejudice exists when the party opposing arbitration
In considering waiver, we are mindful that “questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration.” Moses H. Cone Mem‘l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). “Any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of contract language itself or an allegation of waiver.” Id. at 24-25. Consequently, “the party who argues waiver ‘bears a heavy burden of proof.’ ” Krinsk v. SunTrust Banks, Inc., 654 F.3d 1194, 1200 n.17 (11th Cir. 2011) (citation omitted).
Here, Burch argues that P.J. Cheese‘s decision to continue litigating the merits of the case after the District Court initially denied its motion21 to compel arbitration was inconsistent with an intent to arbitrate.22
We disagree. To preserve its right to arbitrate, a party is not required to gamble a default judgment against it. Recognizing this common-sense notion, we have explained that a party‘s “orderly participation in [a] lawsuit,” after a district court decides to delay a final ruling on a determination on arbitrability is not inconsistent with the party‘s right to arbitrate. Gen. Guar. Ins. Co. v. New Orleans Gen. Agency, Inc., 427 F.2d 924, 929 (5th Cir. 1970).23
This precedent is particularly applicable here. In this case, P.J. Cheese “promptly requested arbitration upon notification of this lawsuit,” and only participated in litigation on the merits of the case after it was expressly ordered to do so by the District Court. Court proceedings should not be treated as “a sort of judicial tightrope which the party seeking arbitration walks at his peril.” Id. To conclude that P.J. Cheese acted inconsistently with its right to arbitrate, we would have to conclude that P.J. Cheese should have dis
Because we find that P.J. Cheese‘s participation in litigation on the merits of Burch‘s claims after the District Court‘s denial of its motion to compel arbitration was not inconsistent with its right to arbitration, consideration of the prejudice prong of the two-part waiver test is unnecessary. See Ivax Corp., 286 F.3d at 1320 (finding it “unnecessary to discuss the prejudice prong of our two-part waiver test” after the Court‘s determination that the defendant had not acted inconsistently with its right to arbitration). The District Court‘s holding that P.J. Cheese did not waive its right to arbitration is affirmed.
C.
Burch additionally contends that the District Court erred in failing to proceed summarily to a trial on the issue of arbitrability immediately after it determined that there was dispute of material fact regarding the existence of an authentic arbitration agreement. This argument is not properly before us and we decline to review it for plain error.
“Ordinarily an appellate court does not give consideration to issues not raised below.” Hormel v. Helvering, 312 U.S. 552, 556 (1941). However, this principle is not unyielding. “In an exceptional civil case, we might entertain the objection by noticing plain error.” S.E.C. v. Diversified Corp. Consulting Grp., 378 F.3d 1219, 1227 n.14 (11th Cir. 2004); see also Ledford v. Peeples, 657 F.3d 1222, 1258 (11th Cir. 2011) (recognizing that the plain error doctrine “rarely applies in civil cases“). Under the civil plain error standard, “we will consider an issue not raised in the district court if it involves a pure question of law, and if refusal to consider it would result in a miscarriage of justice.” Roofing & Sheet Metal Servs., Inc. v. La Quinta Motor Inns, Inc., 689 F.2d 982, 990 (11th Cir. 1982).
In asserting for the first time on appeal that the District Court committed reversible error in compelling arbitration four years into litigation, Burch effectively argues that if a court fails to proceed to trial on a disputed question of fact within some specified time period, it forfeits its authority to order arbitration. To support this proposition, Burch cites solely to Section 4 of the FAA which states that when a trial court determines a genuine dispute of fact exists as to arbitrability, the court “shall proceed summarily to the trial thereof.”
For a period of forty-five months, Burch never once petitioned the Court to hold a trial on arbitrability. He applied, on multiple occasions, for various extensions in the court proceedings. Finally, when discovery was completed, he seized the opportunity to brief the District Court on why he was still entitled to a jury trial on the question of arbitrability, but never claimed the Court no longer had the authority to order arbitration under the FAA. If arbitration truly would cause Burch the “great injustice” he now claims extemporaneously on appeal, Burch had ample opportunity to implore the Court below to proceed to try the signature issue. Accordingly, we conclude that our refusal to entertain this argument will not result in a miscarriage of justice in the present situation.
III.
Based on the reasons stated above, we affirm the District Court‘s dismissal of Burch‘s claims and its order compelling the parties to submit their dispute to arbitration.
AFFIRMED.
Notes
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.
A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under Title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement. Five days’ notice in writing of such application shall be served upon the party in default. Service thereof shall be made in the manner provided by the Federal Rules of Civil Procedure. The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. The hearing and proceedings, under such agreement, shall be within the district in which the petition for an order directing such arbitration is filed. If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof. If no jury trial be demanded by the party alleged to be in default, or if the matter in dispute is within admiralty jurisdiction, the court shall hear and determine such issue. Where such an issue is raised, the party alleged to be in default may, except in cases of admiralty, on or before the return day of the notice of application, demand a jury trial of such issue, and upon such demand the court shall make an order referring the issue or issues to a jury in the manner provided by the Federal Rules of Civil Procedure, or may specially call a jury for that purpose. If the jury find that no agreement in writing for arbitration was made or that there is no default in proceeding thereunder, the proceeding shall be dismissed. If the jury find that an agreement for arbitration was made in writing and that there is a default in proceeding thereunder, the court shall make an order summarily directing the parties to proceed with the arbitration in accordance with the terms thereof.
I recognize that differences may arise between the Company and me during or following my employment with the Company, and that those differences may or may not be related to employment. I understand and agree that any such differences will be resolved as provided in the Dispute Resolution Policy.... In signing this Agreement, both the Company and I agree that all legal claims or disputes covered by the Agreement must be submitted to binding arbitration and that this binding arbitration will be the sole and exclusive final remedy for resolving any such claim or dispute.
A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.
