Jin Jin v. Parsons Corporation ( 2020 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 11, 2020 Decided July 24, 2020
No. 19-7019
JIN O. JIN ,
APPELLEE
v.
PARSONS CORPORATION,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 1:18-cv-02222)
Joseph E. Schuler argued the cause and filed the briefs for
appellant.
John Thomas Harrington argued the cause for appellee.
With him on the brief was R. Scott Oswald.
Before: HENDERSON, GARLAND and PILLARD , Circuit
Judges.
Opinion for the Court filed by Circuit Judge HENDERSON.
KAREN LECRAFT HENDERSON, Circuit Judge: When a
defendant is sued in federal court but maintains that he agreed
to litigate disputes with the plaintiff through arbitration, the
2
Federal Arbitration Act (FAA), 9 U.S.C. §§ 4 et seq., allows
the defendant to move the district court to compel the parties to
arbitrate their dispute. But if arbitrability of the dispute itself
is in issue, the FAA instructs the district court to proceed
summarily to trial on that limited issue. 1 Here, Jin O. Jin, a
long-time employee of Parsons Corporation (Parsons), sued
Parsons for employment discrimination. Parsons moved to
compel arbitration. Concluding that genuine disputes of
material fact existed as to whether Jin agreed to arbitrate, the
district court denied the motion. Because § 4 of the FAA
requires the district court to proceed “summarily to . . . trial”
on the issue of arbitrability if it is in dispute, we conclude that
the district court erred by denying the motion before
definitively resolving the issue via trial. Instead, on remand,
the district court should hold the motion in abeyance pending
its prompt resolution of whether the parties agreed to arbitrate.
I. BACKGROUND
The FAA provides that
A written provision in any . . . contract
evidencing a transaction involving commerce to
settle by arbitration a controversy thereafter
arising out of such contract . . . shall be valid,
irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the
revocation of any contract.
9 U.S.C. § 2. “This text reflects the overarching principle that
arbitration is a matter of contract.” Am. Exp. Co. v. Italian
Colors Rest., 570 U.S. 228, 233 (2013). “[C]onsistent with that
1
We use “arbitrability” to refer to whether a valid, enforceable
arbitration agreement exists, not the potentially broader question
whether the arbitration agreement covers the claim(s) at issue.
3
text, courts must ‘rigorously enforce’ arbitration agreements
according to their terms . . . .” Id. (citation omitted). But
“[b]efore determining that the [FAA] applies, the court must
decide that the [parties] . . . agreed to arbitrate.” Camara v.
Mastro’s Rests. LLC, 952 F.3d 372, 373 (D.C. Cir. 2020)
(citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,
Inc., 473 U.S. 614, 626 (1985)); see also Howard v. Ferrellgas
Partners, L.P., 748 F.3d 975, 977 (10th Cir. 2014) (“[B]efore
the [FAA’s] heavy hand in favor of arbitration swings into
play, the parties themselves must agree to have their disputes
arbitrated.”).
Here, Jin sued Parsons for employment discrimination but
the parties disagree whether Jin agreed to arbitrate disputes
with the company. Parsons asserts that in 1998 it instituted an
Employee Dispute Resolution (EDR) program, which included
an Agreement to Arbitrate (Agreement). In October 2012,
Parsons updated its program and emailed its employees
notifying them about the changes and asking them to complete
a certification indicating that that they had received the
Agreement. The email stated that “[i]f you do not sign the
Agreement to Arbitrate, your continued employment with
Parsons after the Effective Date will constitute your acceptance
of the Agreement to Arbitrate.” J.A. 26. Based on a sworn
declaration by one of its human resources directors and its
email records, Parsons maintains that it sent the email to Jin
four times and that although he never signed the Agreement, he
continued to work for the company for several years thereafter.
In response, Jin submitted a declaration that he had no
recollection of the initial 1998 EDR program or the Agreement,
that he did not recall receiving any emails from Parsons about
the Agreement in 2012 and that he had never reviewed the
Agreement nor signed it.
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Parsons moved to stay judicial proceedings and to compel
arbitration on December 17, 2018. On January 29, 2019, the
district court denied Parsons’s motion, concluding that Jin’s
intent to be bound by the Agreement presented a genuine
dispute of material fact. Jin v. Parsons Corp., 366 F. Supp. 3d
104, 105 (D.D.C. 2019). Instead of holding a trial limited to
resolving that factual dispute, as FAA § 4 commands, the
district court ordered Parsons to answer Jin’s complaint on the
merits and directed the parties to confer regarding discovery
pursuant to Federal Rule of Civil Procedure 26(f). With the
litigation poised to proceed past arbitration and on to the
merits, Parsons then timely appealed.
II. DISCUSSION
A. Jurisdiction
We have jurisdiction of the district court’s denial of
Parsons’s motion to compel arbitration under 9 U.S.C. § 16(a). 2
2
Section 16(a) provides:
(a) An appeal may be taken from—
(1) an order—
(A) refusing a stay of any action under section
3 of this title,
(B) denying a petition under section 4 of this
title to order arbitration to proceed,
(C) denying an application under section 206 of
this title to compel arbitration,
(D) confirming or denying confirmation of an
award or partial award, or
(E) modifying, correcting, or vacating an
award;
(2) an interlocutory order granting, continuing, or
modifying an injunction against an arbitration that is
subject to this title; or
5
At oral argument, see Oral Arg. Rec. 31:35–31:55, a question
arose regarding our jurisdiction, comparing Parsons’s appeal to
the interlocutory appeal of a district court’s denial of summary
judgment. See Chaplaincy of Full Gospel Churches v.
England, 454 F.3d 290, 296 (D.C. Cir. 2006) (“[A]s a general
rule, we lack jurisdiction to hear an appeal of a district court’s
denial of summary judgment.”). But we are confident of our
jurisdiction of this appeal. First, the plain language of § 16(a)
states that “[a]n appeal may be taken from . . . an order . . .
refusing a stay of any action under section 3 of this title . . . [or]
denying a petition under section 4 of this title to order
arbitration to proceed.” 9 U.S.C. § 16(a)(1)(A)–(B). Indeed,
our precedent assumes our jurisdiction of such a denial,
including a denial based on the existence of a genuine dispute
of material fact, if the district court opens the door for the case
to proceed to the merits. 3 See Camara, 952 F.3d at 373 (“This
(3) a final decision with respect to an arbitration that
is subject to this title.
3
In John Thompson Beacon Windows, Ltd. v. Ferro, Inc., 232
F.2d 366, 367–68 (D.C. Cir. 1956), we held that we lacked
jurisdiction of an interlocutory appeal of a denial of a motion to
compel arbitration before the district court made a final decision on
all issues involving the arbitrability of the dispute. We lacked
jurisdiction because the denial was not a “final decision” giving rise
to our jurisdiction under 28 U.S.C. § 1291. Id. That decision,
however, predated the Congress’s amendment of the FAA to add
§ 16(a) in 1988, see Judicial Improvements and Access to Justice
Act, Pub. L. No. 100-702, § 1019, 102 Stat. 4642, 4671 (1988),
which expressly provided our jurisdiction of a denial of a motion to
compel arbitration. See Snowden v. CheckPoint Check Cashing, 290
F.3d 631, 636 (4th Cir. 2002) (“[T]he record unequivocally reflects
that the district court entered an order denying Elite’s Motion to
Compel Arbitration/Stay Proceedings. Under the plain language of
§ 16(a)(1)(A)–(B) of the FAA, this circumstance is all that is
necessary to grant us appellate jurisdiction in this case.”); cf. Arthur
Andersen LLP v. Carlisle, 556 U.S. 624, 628–29 (2009) (“The
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is an interlocutory appeal from an order of the district court
denying a motion to compel arbitration.” (citing 9 U.S.C.
§ 16(a)(1))). Here, as in Camara, the district court’s denial of
the motion to stay proceedings and compel arbitration
purported to conclude the gateway inquiry into whether the
dispute should be arbitrated and signaled the beginning of the
merits litigation. Section 16(a)(1) supports our jurisdiction of
an immediate appeal in these circumstances.
Second, precedent of our sister circuits supports our
jurisdiction of such a denial. See Microchip Tech. Inc. v. U.S.
Philips Corp., 367 F.3d 1350, 1355 (Fed. Cir. 2004) (“We
agree with our sister circuits that section 16 allows for appeal
of orders denying motions to compel arbitration even when the
issue of arbitrability has not been finally decided.”); Boomer v.
AT & T Corp., 309 F.3d 404, 412 (7th Cir. 2002) (“We
acknowledge that the district court intended to reconsider the
question of arbitrability following further fact-finding and
possibly a trial. However, that does not defeat this court’s
jurisdiction. The plain language of Section 16(a)(1) provides
for an appeal from ‘an order refusing a stay’ or ‘denying a
petition to order arbitration to proceed,’ and the district court
in this case expressly did both.”); Snowden v. CheckPoint
Check Cashing, 290 F.3d 631, 635–36 (4th Cir. 2002) (“plain
language of § 16(a)(1)(A)–(B) of the FAA” grants appellate
jurisdiction of order denying motion to compel arbitration);
Sandvik AB v. Advent Int’l Corp., 220 F.3d 99, 102 (3d Cir.
2000) (“The language of § 16 provides for appeals of orders
denying arbitration, and it makes no distinction between orders
denying arbitration and ‘final orders’ that accomplish the same
jurisdictional statute here unambiguously makes the underlying
merits irrelevant, for even utter frivolousness of the underlying
request for a § 3 stay cannot turn a denial into something other than
‘[a]n order . . . refusing a stay of any action under section 3.’”
(quoting 9 U.S.C. § 16(a))).
7
end.”). Granted, in those cases, on denying a motion to compel
arbitration, the district court also signaled its intention to
consider the arbitrability question further before reaching the
merits. Here, however, we need not address that factual
scenario because the district court denied Parsons’s motion
outright without any indication of further proceedings on the
question of whether Jin agreed to arbitrate. Our guidance to
district courts as explained below should avoid such a scenario
in the future.
Third, unlike a denial of summary judgment which is
generally not a final order under 28 U.S.C. § 1291, our review
of a denial of a motion to compel arbitration under § 16(a) of
the FAA is not limited to a final order. See Bombardier Corp.
v. Nat’l R.R. Passenger Corp., 333 F.3d 250, 253 (D.C. Cir.
2003) (“[Section 16 of the FAA] authorizes not only appellate
jurisdiction, but in some cases, interlocutory appeals which
constitute exceptions to the final decision rule of Section
1291.”); see also Sandvik AB, 220 F.3d at 103 (“Congress
decided to use the word ‘final’ in one part of [section 16], but
declined to do so in the section that declares that orders denying
motions to compel arbitration are indeed appealable.”).
B. Section 4’s Trial Provision
Notwithstanding our conclusion that we have jurisdiction
to hear Parsons’s appeal, 9 U.S.C. § 4 makes plain that the
district court, once it concluded that a genuine dispute of
material fact existed as to whether Jin assented to the
arbitration agreement, should have proceeded to try the issue
of arbitrability.
Section 4 of the FAA provides that if, in considering a
motion to compel arbitration, the district court determines that
“the making of the arbitration agreement or the failure, neglect,
or refusal to perform the same be in issue, the court shall
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proceed summarily to the trial thereof.” 9 U.S.C. § 4. If the
jury—or the court in a bench trial—finds no arbitration
agreement was made, the case must proceed to the merits. Id.If it finds a valid agreement was made, the court then orders the
parties to arbitrate. Id.Interpreting § 4, then-Judge Gorsuch, writing for the Tenth
Circuit, explained that:
Having found unresolved questions of material
fact precluded it from deciding definitively
whether the parties agreed to arbitrate, the
district court was in no position to deny a
motion to arbitrate. It had to move promptly to
trial of the unresolved factual questions
surrounding the parties’ claimed agreement to
arbitrate.
Howard, 748 F.3d at 978–79. The district court cannot simply
deny the motion and continue on with a proceeding on the
merits, because if the parties did in fact agree to arbitrate, the
party seeking to compel arbitration is entitled to have the case
arbitrated. See id. at 977 (“The object is always to decide
quickly—summarily—the proper venue for the case, whether
it be the courtroom or the conference room, so the parties can
get on with the merits of their dispute.”). Other courts agree
with the Tenth Circuit’s interpretation of § 4. See Berkeley Cty.
Sch. Dist. v. Hub Int’l Ltd., 944 F.3d 225, 241 (4th Cir. 2019)
(Section 4 of the FAA “obliged the district court to conduct
trial proceedings and thereby resolve those disputes before
resolving the Arbitration Motion”); Tassy v. Lindsay Entm’t
Enters., Inc., No. 17-5338, 2018 WL 1582226, at *1 (6th Cir.
Feb. 22, 2018) (unpublished) (holding that district court’s
denial of motion to compel arbitration without summarily
determining whether parties formed an agreement to arbitrate
9
was error); Neb. Mach. Co. v. Cargotec Sols., LLC, 762 F.3d
737, 744 (8th Cir. 2014) (“[B]ecause issues of fact remained on
the formation of the arbitration agreement, the district court
erred in failing to summarily proceed to trial on those issues as
the FAA instructs.”); see also Moses H. Cone Mem’l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 22 (1983) (section 4 of
FAA “call[s] for an expeditious and summary hearing, with
only restricted inquiry into factual issues”). These cases make
clear that the “thing the district court may never do is find a
material dispute of fact does exist and then proceed to deny any
trial to resolve that dispute of fact.” Howard, 748 F.3d at 978.
This case law does not mean, however, that a district court
can never deny a motion to compel arbitration without holding
a trial in accordance with § 4. As the Tenth Circuit explained,
“[w]hen it’s apparent from a quick look at the case” that no
genuine disputes of material fact exist, “it may be permissible
and efficient for a district court to decide the arbitration
question as a matter of law through motions practice and
viewing the facts in the light most favorable to the party
opposing arbitration.” Id. “In these circumstances, [§ 4’s]
summary trial can look a lot like summary judgment.” Id.
Indeed, that is why our circuit initially analyzes a motion to
compel arbitration like a motion for summary judgment. See,
e.g., Camara, 952 F.3d at 373 (district court correctly treated
motion to compel arbitration as if movant “sought summary
judgment under Federal Rule of Civil Procedure 56(c) with
respect to the question” whether parties agreed to arbitrate
(citing Aliron Int’l, Inc. v. Cherokee Nation Indus., Inc., 531
F.3d 863, 865 (D.C. Cir. 2008))). Thus, if the district court
determines as a matter of law that the parties did or did not
agree to arbitrate, for instance, it may grant or deny a motion
to compel arbitration without proceeding to a § 4 trial and our
review of the decision would lie. See, e.g., Aliron Int’l, 531
10
F.3d at 865 (affirming district court’s grant of motion to
compel arbitration and dismissal of case).
Although a motion to compel arbitration is similar to a
motion for summary judgment in framing the burden of proof,
the two motions are of course not identical. In other words,
Rule 56(c) does not displace § 4 of the FAA. Thus, unlike a
standard motion for summary judgment—where the movant’s
failure to show the absence of any genuine dispute of material
fact results in a denial and the case proceeds to trial on the
merits—a motion to compel arbitration cannot simply be
denied if the district court determines a genuine dispute of
material fact exists. See Howard, 748 F.3d at 978. The
arbitrability of a dispute is a “gateway” issue, meaning that “a
court should address the arbitrability of the plaintiff’s claim at
the outset of the litigation.” Reyna v. Int’l Bank of Commerce,
839 F.3d 373, 376, 378 (5th Cir. 2016); see also Silfee v.
Automatic Data Processing, Inc., 696 F. App’x 576, 577 (3d
Cir. 2017) (unpublished) (“[A]fter a motion to compel
arbitration has been filed, the court must ‘refrain from further
action’ until it determines arbitrability.” (quoting Sharif v.
Wellness Int’l Network, Ltd., 376 F.3d 720, 726 (7th Cir.
2004))). The district court cannot postpone deciding the
question of arbitrability vel non and allow the case to proceed
on the merits. Section 4 makes clear that the parties are entitled
to have the correct venue—court or arbitration—established at
the outset and, accordingly, requires any dispute on that issue
be decided “summarily” through a trial. 9 U.S.C. § 4.
For these reasons, we conclude that under § 4, a district
court, upon finding that a genuine dispute of material fact exists
as to “the making of the arbitration agreement,” including
whether the parties assented to the agreement, should proceed
summarily to trial solely on the issue of arbitrability. And in
light of our holding and § 4’s emphasis on resolving the issue
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of arbitrability first before resolving any other issues in the
case, we will not review in futuro denials of motions to compel
arbitration based on the existence of genuine disputes of
material fact.
C. District Court Procedure
Our holding today decides an issue of first impression,4
procedure under § 4. Indeed, even recently, we reached the
merits of an appeal of a denial of a motion to compel arbitration
based on genuine disputes of material fact, see Camara, 952
F.3d at 374–75, but the issue of § 4’s trial provision and the
proper procedure for the district court to follow was not raised
in that case. Moreover, district court judges have taken a
variety of approaches in considering motions to compel
arbitration under § 4 when genuine disputes of material fact
exist. See PCH Mut. Ins. Co. v. Cas. & Sur., Inc., 569 F. Supp.
2d 67, 78 (D.D.C. 2008) (holding motion in abeyance); Cox v.
Midland Funding, LLC, No. 1:14-CV-1576-LMM-JSA, 2015
WL 12862931, at *1 (N.D. Ga. June 11, 2015) (same); Reed v.
Johnson, No. 4:14-CV-176–SA–JMV, 2015 WL 9595518, at
*1 (N.D. Miss. Nov. 4, 2015) (same); Cannon v. SFM, LLC,
No. 18-2364-JWL, 2019 WL 568581, at *3 (D. Kan. Feb. 12,
2019) (taking motion under advisement); Greiner v. Credit
Acceptance Corp., No. 16-01328-EFM-TJJ, 2017 WL 586727,
at *1 (D. Kan. Feb. 13, 2017) (reserving judgment on motion);
LPF II, LLC v. Cornerstone Sys., Inc., No. 17-2417-DDC-JPO,
2018 WL 994708, at *5 (D. Kan. Feb. 21, 2018) (denying
4
Although we addressed § 4’s trial provision in John Thompson
Beacon Windows, 232 F.2d at 367–68, our decision rested on a
jurisdictional determination made before the addition of § 16(a) of
the FAA. See supra n.3. It did not address the proper procedure for
the district court to follow if it determined that a genuine dispute of
material fact existed on the issue of arbitrability in reviewing a
motion to compel arbitration.
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motion “pending a summary trial on the question of
arbitrability”); Signature Tech. Sols. v. Incapsulate, LLC, 58 F.
Supp. 3d 72, 85 (D.D.C. 2014) (denying motion without
prejudice pending further proceedings); Mariano v. Gharai,
999 F. Supp. 2d 167, 173–74 (D.D.C. 2013) (same); Institut
Pasteur v. Chiron Corp., 315 F. Supp. 2d 33, 40 (D.D.C. 2004)
(same).
We conclude that the proper procedure for the district
court to follow, upon finding that a genuine dispute of material
fact exists, is to hold the motion to compel arbitration in
abeyance pending a trial on the issue of arbitrability. In this
way, the motion remains pending until the arbitrability issue is
decided. Once the final decision is reached, that decision is
appealable.
* * *
In view of our holding and the parties’ agreement that
remand for a § 4 trial is the proper disposition of this case, see
Oral Arg. Rec. 32:40–33:07, 34:00–34:40, we remand to the
district court without addressing the factual dispute regarding
whether Jin agreed to arbitrate his dispute with Parsons.
Accordingly, the district court order denying Parsons’s motion
to compel arbitration is vacated and the case is remanded for
proceedings consistent with this opinion.
So ordered.