Cynthia Johnson v. Western and Southern Life Ins , 598 F. App'x 454 ( 2015 )


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  •                         NONPRECEDENTIAL DISPOSITION
    To be cited only in accordance with Fed. R. App. P. 32.1
    United States Court of Appeals
    For the Seventh Circuit
    Chicago, Illinois 60604
    Submitted April 14, 2015 *
    Decided April 14, 2015
    Before
    RICHARD A. POSNER, Circuit Judge
    JOEL M. FLAUM, Circuit Judge
    ILANA DIAMOND ROVNER, Circuit Judge
    No. 14-3183
    CYNTHIA JOHNSON,                               Appeal from the United States District
    Plaintiff-Appellant,                       Court for the Southern District of Indiana,
    Indianapolis Division.
    v.
    No. 1:13-cv-01659-SEB-DKL
    WESTERN & SOUTHERN LIFE
    INSURANCE COMPANY,                             Sarah Evans Barker,
    Defendant-Appellee.                       Judge.
    ORDER
    Cynthia Johnson appeals the district court’s order compelling arbitration and
    dismissing her employment-discrimination suit against Western & Southern Life
    Insurance Company, her former employer. We conclude that Johnson’s suit was
    properly dismissed on the ground that the arbitration agreement bars the litigation of
    her claims in federal court. We affirm the judgment but modify the dismissal to be
    without prejudice.
    *
    After examining the briefs and the record, we have concluded that oral
    argument is unnecessary. Thus the appeal is submitted on the briefs and the record.
    See FED. R. APP. P. 34(a)(2)(C).
    No. 14-3183                                                                           Page 2
    When Johnson (who worked for Western & Southern for six years) was promoted
    from agent to sales manager and again when she later became a sales representative, she
    signed an agreement titled “Agreement and Receipt for Dispute Resolution Program.”
    That agreement requires her to submit “all legal claims or disputes . . . to binding
    arbitration” as set forth in the company’s Dispute Resolution Program (DPR) booklet. By
    signing the agreement, Johnson acknowledged that she had “received a copy” of the
    dispute-resolution booklet and “read and understood its contents.” The DPR booklet
    provides that “[c]laims and disputes subject to arbitration include”—with a few
    exceptions irrelevant to this appeal—“all those legal claims you may now or in the future
    have against the Company.” The DPR booklet also contains a delegation provision that
    grants the arbitrator “exclusive authority to resolve any dispute relating to the
    interpretation, arbitrability, applicability, enforceability or formation of the agreement to
    arbitrate including, but not limited to, any claim that all or any part of the agreement is
    void and voidable.” A related document signed by Johnson states that she may not
    “commence any arbitration or action under the DRP or otherwise relating to [her]
    employment . . . more than six months after the date of termination of such
    employment.”
    Johnson resigned from her position as sales representative in March 2013 and
    then sued Western & Southern, claiming that the company had discriminated against
    her based on race (African-American) and gender in violation of Title VII of the Civil
    Rights Act of 1964, 42 U.S.C. § 2000e-2(a), and asserting state-law contract and tort
    claims. (She also sued other defendants, but they are not parties to this appeal.)
    Western & Southern moved to compel arbitration and to dismiss Johnson’s suit
    for improper venue under Federal Rule of Civil Procedure 12(b)(3). In support of its
    motion, the company submitted copies of the DRP booklet and the agreements Johnson
    had signed. Johnson contended that the arbitration agreement was unenforceable
    because, she maintained, it was unconscionable, she had had “no opportunity to
    bargain” before signing it, and she did not “remember ever being given the dispute
    resolution program booklet.” She did not, however, challenge the validity of the
    delegation provision.
    The district court granted the company’s motion to dismiss and to compel
    arbitration. The court reasoned that it could not even consider Johnson’s challenges to
    the validity of the arbitration agreement because its delegation provision—materially
    identical to the one enforced by the Supreme Court in Rent-A-Center, West, Inc. v. Jackson,
    
    561 U.S. 63
    , 65–66, 72 (2010)—confers exclusive authority on the arbitrator to decide
    No. 14-3183                                                                           Page 3
    whether the arbitration agreement is enforceable. Dismissal also was warranted, the
    court continued, because Johnson had not commenced arbitration within the six-month
    time limit contained in her employment agreement, and thus she was “time-barred
    from . . . attempting to pursue arbitration.”
    On appeal, Johnson generally argues that the district court was wrong to
    conclude that her claims against Western & Southern are subject to arbitration. But in her
    brief she does not contest—or even mention—the validity of the delegation provision.
    The district court was therefore required to do as the Supreme Court directed in
    Rent-A-Center: treat the delegation provision as valid and enforce it, thereby letting the
    arbitrator decide Johnson’s challenges to the validity of the arbitration agreement.
    See Rent-A-Center, 
    561 U.S. at 72
    , 75–76.
    The district court’s order does contain one misstep that we must address: By
    concluding that Johnson is “time-barred from now attempting to pursue arbitration,” the
    district court improperly ruled on a matter that is presumptively reserved for the
    arbitrator. See BG Group plc v. Republic of Argentina, 
    134 S. Ct. 1198
    , 1206–07 (2014);
    Howsam v. Dean Witter Reynolds, Inc., 
    537 U.S. 79
    , 85–86 (2002); Employers Ins. Co. of
    Wausau v. Century Indem. Co., 
    443 F.3d 573
    , 577 (7th Cir. 2006); Citigroup, Inc. v. Abu Dhabi
    Inv. Auth., 
    776 F.3d 126
    , 128–30 (2d Cir. 2015). Western & Southern contends that the
    district court properly reached the issue of timeliness, relying on the Supreme Court’s
    decision in John Wiley & Sons, Inc. v. Livingston, 
    376 U.S. 543
     (1964), for the proposition
    that a court may reach this and other “procedural” issues when doing so would operate
    as a complete bar to arbitration. But the company’s reliance on that decision is
    misplaced. In that case the Supreme Court adopted the rule that, “[o]nce it is
    determined . . . that the parties are obligated to submit the subject matter of a dispute to
    arbitration, ‘procedural’ questions which grow out of the dispute and bear on its final
    disposition should be left to the arbitrator.” 
    Id. at 557
     (emphasis added). The Supreme Court
    has applied this rule consistently, making clear in more recent decisions that federal
    courts must presume that the parties intended arbitrators to decide whether a party has
    complied with time limits and other arbitrational prerequisites. See BG Group, 
    134 S. Ct. at
    1206–07; Howsam, 
    537 U.S. at
    85–86. Western & Southern has offered no reason to
    upset that presumption here.
    And so the district court should not have dismissed Johnson’s suit on the ground
    that her claims were untimely. By dismissing the suit on timeliness grounds, the court
    dismissed it on the merits and thus with prejudice. Pavlovsky v. VanNatta, 
    431 F.3d 1063
    ,
    1064 (7th Cir. 2005). The district court’s dismissal, however, should have been without
    No. 14-3183                                                                             Page 4
    prejudice. The company moved to compel arbitration and to dismiss for improper venue
    under Federal Rule of Civil Procedure 12(b)(3), which we note is the correct rule to
    invoke in these circumstances, see Auto. Mechs. Local 701 Welfare & Pension Funds v.
    Vanguard Car Rental USA, Inc., 
    502 F.3d 740
    , 746 (7th Cir. 2007). And a dismissal for
    improper venue is without prejudice because it is not an adjudication on the merits.
    FED. R. CIV. P. 41(b); see In re IFC Credit Corp., 
    663 F.3d 315
    , 320 (7th Cir. 2011); Rollins v.
    Wackenhut Servs., Inc., 
    703 F.3d 122
    , 132 (D.C. Cir. 2012). Accordingly, we MODIFY the
    district court’s dismissal to be without prejudice. As so modified, the judgment of the
    district court is
    AFFIRMED.