Matthew Dickson v. Gospel for ASIA, Inc. , 902 F.3d 831 ( 2018 )

United States Court of Appeals
For the Eighth Circuit
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No. 17-1191
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Matthew Dickson, individually and on behalf of all others similarly situated;
Jennifer Dickson, individually and on behalf of all others similarly situated
lllllllllllllllllllllPlaintiffs - Appellees
v.
Gospel for ASIA, Inc.; Gospel for ASIA - International; K. P. Yohannan; Gisela
Punnose; Daniel Punnose; David Carroll; Pat Emerick
lllllllllllllllllllllDefendants - Appellants
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Appeal from United States District Court
for the Western District of Arkansas - Fayetteville
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Submitted: December 12, 2017
Filed: August 31, 2018
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Before SMITH, Chief Judge, ARNOLD and KELLY, Circuit Judges.
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ARNOLD, Circuit Judge.
Matthew and Jennifer Dickson sued Gospel for ASIA, Inc., one of its affiliates,
and members of its board of directors and staff (collectively, GFA), alleging, in a
nutshell, that GFA "solicit[ed] charitable donations to benefit the poorest of the poor
while covertly diverting the money to a multi-million dollar personal empire." The
Dicksons raised, on behalf of themselves and a class of those similarly situated, a
claim under the Racketeer Influenced and Corrupt Organizations Act and state-law
claims for fraud, unjust enrichment, and violating the Arkansas Deceptive Trade
Practices Act. GFA moved to compel arbitration of the claims based on language
found in "Statement[s] of Agreement" that the Dicksons had signed. The district court
denied the motion, holding that the agreements lacked "mutuality of obligation"
because GFA promised nothing in return for the Dicksons' promise to arbitrate. The
district court also concluded that the dispute did not fall within the scope of the
arbitration language. We disagree on both scores and therefore reverse and remand.
The Dicksons were members of GFA for about five years, during which time
Matthew worked for GFA. The agreements the Dicksons signed are admittedly not
like the arbitration agreements we typically construe—they essentially contain the
GFA mission statement and a series of religious and lifestyle pledges. Near the end
of the agreements sits the provision we have to interpret. It begins, "I agree that any
and all disputes of any kind arising out of the relationship between myself and GFA,
or any other GFA member, shall be resolved by way of conciliation, or mediation, the
parties agreeing that the matter will be submitted to final and binding arbitration in
accordance with the rules and procedures set forth in the Unif[orm] Arbitration Act."
It then provides, "Accordingly, I knowingly and willingly waive any and all rights to
initiate any action before any administrative agency or court of law or equity."
We review de novo the district court's denial of a motion to compel arbitration
when the denial is based on the interpretation of a contract. See Unison Co. v. Juhl
Energy Dev., Inc., 789 F.3d 816, 818 (8th Cir. 2015). When reviewing an arbitration
clause, we ask only whether a valid arbitration agreement exists and, if so, whether
the particular dispute falls within the terms of that agreement. Faber v. Menard, Inc.,
367 F.3d 1048, 1052 (8th Cir. 2004). State contract law governs whether an
arbitration agreement is valid, id., and the parties here agree that Texas law applies.
Under Texas law, consideration must support an arbitration agreement. In re Palm
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Harbor Homes, Inc., 195 S.W.3d 672, 676 (Tex. 2006). Consideration may take the
form of a reciprocated promise to arbitrate or, when an arbitration clause is part of a
larger, underlying contract, undertakings in the remainder of the contract may serve
as consideration for the arbitration clause. Id.
We acknowledge that the artless arbitration provision we must construe here
is far from clear, but we nevertheless conclude that, properly read, it creates an
enforceable reciprocal agreement to arbitrate disputes. In reaching this conclusion,
we focus on the fact that the arbitration clause says that "the parties" agree that any
disputes will be submitted to binding arbitration. That the subject of that clause is
"the parties," rather than "I," is telling, especially since "I" is the subject of the clause
immediately before and in the sentence immediately after. In fact, "I" is the subject
of many of the pledges set forth in the agreements, except, notably, when the
agreements replace "I" with "the parties" in the clause that mentions arbitration. And
if there exists any confusion over who "the parties" are, the next paragraph of the
agreements explain that the agreements are "between Gospel for Asia and the
undersigned." Under Texas law, courts "presume parties intend what the words of
their contracts say." URI, Inc. v. Kleberg Cty., 543 S.W.3d 755, 764 (Tex. 2018).
We also agree with GFA that the sentence stating, "Accordingly, I knowingly
and willingly waive any and all rights to initiate any action before any administrative
agency or court of law or equity," does not cut against the previous statement that
"the parties" agree disputes will be submitted to arbitration. We think that the purpose
of the sentence is to ensure that the signatory understood the import of the agreement
to arbitrate. And we reject the argument that GFA was not bound to arbitrate simply
because it did not sign the agreement. Texas law does not require parties to sign an
arbitration agreement so long as courts can tell that the parties agreed to it. See In re
AdvancePCS Health L.P., 172 S.W.3d 603, 606 (Tex. 2005) (per curiam); see also
Wright v. Hernandez, 469 S.W.3d 744, 756–57 (Tex. App. 2015). We have no doubt
that GFA assented to the agreements at issue and intended them to be enforceable:
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GFA drafted the agreements and affixed its letterhead to them; it maintained the
agreements; and it seeks to enforce them. See Wright, 469 S.W.3d at 761.
Even if we acceded to the dissent's interpretation of the agreements, we think
that GFA's promise to be bound by the result of an arbitration proceeding that the
Dicksons initiate is sufficient consideration to render the agreements enforceable. In
other words, a reciprocal promise to arbitrate is not required. The dissent relies on a
Texas Supreme Court decision that observed in passing, and without citation to
authority, that "[a]n arbitration agreement is illusory if it binds one party to arbitrate,
while allowing the other to choose whether to arbitrate." Royston, Rayzor, Vickery,
& Williams, LLP v. Lopez, 467 S.W.3d 494, 505 (Tex. 2015). But the plaintiff's
contention in Royston was that the defendant had not actually promised to arbitrate;
here, the question is whether the promise the defendant made to be bound by arbitral
proceedings was sufficient consideration. The Royston court rejected the plaintiff's
argument "because consideration exists for the [arbitration] provision," noting that
"the mere fact that an arbitration clause is one-sided does not make it illusory." Id. If
anything, then, Royston supports our conclusion. We are confident that, if the Texas
Supreme Court were directly confronted with the issue we now face, it would hold
that any consideration of the usual kind is sufficient to support a promise to arbitrate,
including a promise to be bound by arbitration initiated by the other party. See, e.g.,
Circuit City Stores, Inc. v. Najd, 294 F.3d 1104, 1108 (9th Cir. 2002); Michalski v.
Circuit City Stores, Inc., 177 F.3d 634, 636 (7th Cir. 1999); Johnson v. Circuit City
Stores, Inc., 148 F.3d 373, 378–79 (4th Cir. 1998). It is important to note that the
Federal Arbitration Act requires that states place arbitration agreements on an equal
footing with other contracts, Kindred Nursing Ctrs. Ltd. P'ship v. Clark, 137 S. Ct.
1421, 1424 (2017), so requiring identical reciprocal promises only for arbitration
agreements would be contrary to federal law.
Since valid arbitration agreements exist, we are left to determine whether the
disputes here fall within the scope of those agreements. We liberally construe
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arbitration agreements by resolving any doubts in favor of arbitration unless we can
say "with positive assurance" that the arbitration clause cannot be construed to
encompass the dispute. Unison, 789 F.3d at 818. When an arbitration provision is
broad, the federal policy favoring arbitration requires a district court to send claims
to arbitration "as long as the underlying factual allegations simply touch matters
covered by the arbitration provision." Id. Without question, the arbitration agreements
here are broad. See Zetor N. Am., Inc. v. Rozeboom, 861 F.3d 807, 810 (8th Cir.
2017); Cedillo v. Immobiliere Jeuness Establissement, 476 S.W.3d 557, 568 (Tex.
App. 2015).
We conclude that the district court interpreted the scope of the arbitration
agreements too narrowly, reasoning that, since none of the mission statements or
pledges found in the agreements "reach" donations made to the church, the dispute
was "entirely unrelated to" the parties' agreements. Even if the agreements do not
reach donations made to GFA, a point we do not decide, the district court erred
because the arbitration agreements did not apply only to disputes arising out of the
agreements; rather, they applied by their terms to "any and all disputes of any kind
arising out of the relationship" between the Dicksons and GFA, and we cannot say
"with positive assurance" that the donations the Dicksons made to GFA did not arise
out of that relationship.
Reversed and remanded.
KELLY, Circuit Judge, dissenting.
I would affirm the district court because I do not think the arbitration clause
creates an enforceable reciprocal agreement to arbitrate disputes. As I read the
arbitration clause, only the Dicksons agree to take their disputes to arbitration. While
GFA arguably agrees to be bound by arbitration if the Dicksons initiate arbitration
(“the parties agreeing . . .”), the use of the word “I” to begin the provision tells me
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that GFA has not agreed to take any dispute it might have to arbitration, but instead
has reserved the option to litigate rather than arbitrate. Under Texas law, an
arbitration agreement, like any other contract, “is illusory if it binds one party to
arbitrate, while allowing the other to choose whether to arbitrate.” Royston, 467
S.W.3d at 505 (relying on Restatement (Second) of Contracts § 77 cmt. a (Am. Law
Inst. 1981)); see also Huckaba v. Ref-Chem, L.P., 892 F.3d 686, 691 n.5 (5th Cir.
2018) (noting Royston’s holding that an arbitration agreement is unenforceable under
Texas law “if it binds one party to arbitrate, while allowing the other to choose
whether to arbitrate”).1 Other jurisdictions have concluded otherwise—i.e., that one
party’s agreement to be bound by the result of an arbitration proceeding is sufficient
consideration—but Texas law is applicable here. Accordingly, I respectfully dissent.
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1
Nor do the underlying agreements provide consideration for the arbitration
clause because there is no “bargained for exchange” in any of the agreements. See
Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 496 (Tex. 1991) (Under
Texas law, “[c]onsideration is a present exchange bargained for in return for a
promise” that may be either “a benefit to the promisor or a detriment to the
promisee.”).
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