Hardin v. First Cash Financial Services

Decision Date06 October 2006
Docket NumberNo. 05-6090.,No. 05-6107.,05-6090.,05-6107.
Citation465 F.3d 470
PartiesShelle HARDIN, Plaintiff-Appellee/Cross-Appellant, v. FIRST CASH FINANCIAL SERVICES, INC., d/b/a First Cash Auto Pawn, Defendant-Appellant/Cross-Appellee.
CourtU.S. Court of Appeals — Tenth Circuit

Gaas and Heather E. Asselin, Coats Rose Yale Ryman & Lee, P.C., Houston, Texas, and G. Rudy Hiersche, Jr., Hiersche Law Firm, Oklahoma City, Oklahoma, with him on the briefs), for Defendant-Appellant/Cross-Appellee.

Mark E. Hammons, Sr. (Tamara L. Gowens with him on the briefs), Hammons, Gowens & Associates, Oklahoma City, Oklahoma, for Plaintiff-Appellee/Cross-Appellant.

Before HARTZ, McKAY, and TYMKOVICH, Circuit Judges.

TYMKOVICH, Circuit Judge.

Shelle Hardin brought suit in federal district court alleging sex discrimination by her former employer, First Cash Financial Services. First Cash moved to compel arbitration pursuant to its newly adopted arbitration agreement. The court dismissed this motion, finding that Hardin had not agreed to be bound by the arbitration agreement. First Cash appealed pursuant to 9 U.S.C. § 16(a) of the Federal Arbitration Act (FAA) and moved for a stay pending resolution of its appeal. The district court granted this motion and Hardin cross-appealed the stay.

This appeal requires us to resolve three issues: (1) the scope of both the district court's and this court's jurisdiction during the appeal; (2) whether an employee's continued employment acts to accept an employer's unilateral changes to an at-will employment contract under Oklahoma law; and (3) whether First Cash's arbitration agreement is unenforceable under Oklahoma law.

For the reasons discussed below, we affirm in part and reverse and remand in part with instructions to compel arbitration.

I. Background
A. Facts

First Cash operates over 200 pawnshops and check cashing stores throughout the United States. In 1997, First Cash hired Shelle Hardin as a manager for one of its Oklahoma stores. At that time, First Cash did not require its employees to settle disputes through arbitration.

Beginning in December 2002, however, First Cash created a Dispute Resolution Program (DRP), which requires its employees to submit all employment-related legal disputes to arbitration. First Cash distributed copies of the DRP, along with a Dispute Resolution Agreement (Agreement) to every employee. In the letter accompanying this package, First Cash told the employees they would not immediately be bound by the DRP but could voluntarily opt into it any time before March 1, 2003. After that time, participation became mandatory, and an employee's continued employment constituted acceptance of the terms of the DRP. The Agreement, although allowing for the employee's signature, reiterated that an employee's continued employment with the company after March 1 would act to accept its terms regardless of whether the employee actually signed the Agreement.

Shortly after receiving these materials, Hardin discussed the DRP with her supervisor and unequivocally refused to consent to the DRP. Hardin stated that, although she would not quit, her continued employment was not intended to serve as her assent. Her supervisor responded that despite her statements to the contrary her continued employment with First Cash would manifest her acceptance. There was no further communication between Hardin and First Cash, and Hardin never signed the Agreement.

In early 2003, First Cash posted a notice in its stores cautioning its employees of the DRP's mandatory character. It read: "This posting is a reminder to all employees that (by virtue of being employed with the Company on and after March 1, 2003) they agree to resolve all legal claims against the Company through the Dispute Resolution Program...." Cross-Aplt. App. at 44. Yet, despite Hardin's discussion with her supervisor, the explicit terms of the Agreement, and the posting, Hardin continued to work as a manager for First Cash after March 1.

In December 2003, First Cash fired Hardin, and Hardin subsequently filed suit in federal district court alleging sex discrimination. First Cash moved to compel arbitration, claiming that Hardin was bound by the DRP.

B. District Court Proceedings

The district court found that Hardin was not bound by the DRP and denied First Cash's motion to compel arbitration. Citing Oklahoma law, the court noted that while an employee's continued employment could act to accept changes to an at-will employment contract, acceptance must be absolute and unqualified. The court concluded Hardin's conduct did not meet this standard as evidenced by (1) her failure to sign the Agreement,1 and (2) her unequivocal statements to her supervisor. The court construed Hardin's conduct as a counteroffer, which First Cash accepted by failing to terminate her employment.

II. Analysis

We face three issues on appeal. First, we address two preliminary matters: (1) whether the district court erred in granting First Cash's motion to stay, and (2) whether this court has subject matter jurisdiction to hear the appeal. If we have jurisdiction, we consider whether the district court correctly concluded that Hardin was not bound by the DRP. Finally, if we find the district court in error, we determine whether the court's decision should nevertheless be affirmed on the alternate ground that the DRP is illusory and therefore unenforceable.

A. Jurisdictional Concerns

Hardin raises two separate jurisdictional concerns: (1) whether First Cash's appeal automatically divested the district court of jurisdiction; and (2) whether this court has jurisdiction over the instant appeal.

1. District Court Jurisdiction

Hardin asserts that the district court erred by issuing a stay pending the resolution of First Cash's appeal to this court. She argues that First Cash's appeal did not automatically divest the district court of jurisdiction. Instead, she argues, a stay should have been granted only if First Cash initially demonstrated to the court its entitlement to a stay and the court then balanced the respective harms to the parties to conclude a stay was appropriate. After reviewing the district court's decision for abuse of discretion, we disagree. See Reed v. Bennett, 312 F.3d 1190, 1193 n. 1 (10th Cir.2002).

A party aggrieved by a district court's denial of a motion to compel arbitration has the right under the FAA to file an interlocutory appeal. McCauley v. Halliburton Energy Servs., 413 F.3d 1158, 1160 (10th Cir.2005); see 9 U.S.C. § 16(a)(1)(B) (permitting appeal from an order denying a petition to compel arbitration under 9 U.S.C. § 4). When a non-frivolous § 16(a) appeal is taken, the district court is automatically and immediately divested of jurisdiction. McCauley, 413 F.3d at 1162. However, "the district court may frustrate any litigant's attempt to exploit the categorical divestiture rule by taking the affirmative step, after a hearing, of certifying the § 16(a) appeal as frivolous or forfeited." Id. Here, the district court rejected Hardin's contention that an appeal would be frivolous.

Because First Cash appealed the district court's denial of its motion to compel arbitration under § 16(a), and First Cash's appeal is not frivolous, we find that the appeal divested the district court of jurisdiction. Therefore, the district court properly issued a stay.2

2. Appellate Jurisdiction

We have jurisdiction over final orders "denying a petition under section 4 of this title to order arbitration to proceed." 9 U.S.C. § 16(a)(1)(B). Hardin argues that pursuant to § 4 the district court did not issue a final order. First, she argues that there is no final order because the district court did not conduct either a trial by jury, bench trial, or summary judgment proceeding before ruling on the arbitration agreement. Second, Hardin argues that we cannot construe the district court's order denying arbitration as one for summary judgment. Finally, Hardin asserts that, in any case, no final order exists because First Cash never conceded that the district court's order was final, thereby preserving its right to assert a trial on the issue of contract formation.

Under 9 U.S.C. § 4,

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 . . . for an order directing that such arbitration proceed in the manner provided for in such agreement.

In the event that the making of the arbitration agreement is in dispute,

the court shall proceed summarily to the trial thereof [but if] no jury trial be demanded by the party alleged to be in default . . . the court shall hear and determine such issue.

Id.

Under our cases The existence of an agreement to arbitrate "is simply a matter of contract between the parties; [arbitration] is a way to resolve those disputes—but only those disputes—that the parties have agreed to submit to arbitration." When parties dispute the making of an agreement to arbitrate, a jury trial on the existence of the agreement is warranted unless there are no genuine issues of material fact regarding the parties' agreement.

Avedon Eng'g, Inc. v. Seatex, 126 F.3d 1279, 1283 (10th Cir.1997) (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943-45, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995)).

Based on the statutory text and our precedent, we find Hardin's arguments unpersuasive. First, although the parties disputed the application of the DRP, the court was able to resolve that question on the pleadings and other materials before it. See id. Accordingly, no jury or bench trial was necessary, and the district court properly issued an order denying First Cash's motion to compel arbitration. Even if a trial were warranted, the plain language of § 4...

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