Anderson v. Charter Commc'ns, Inc.
| Decision Date | 11 June 2021 |
| Docket Number | No. 20-5894,20-5894 |
| Parties | PETER W. ANDERSON, JR., Plaintiff-Appellant, v. CHARTER COMMUNICATIONS, INC., dba Spectrum; CHRISTOPHER CORNETT, Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
MURPHY, Circuit Judge. When enforcing the Federal Arbitration Act, the Supreme Court has long held that parties may agree to arbitrate more than the merits of their legal claims. They may also agree to arbitrate "gateway" questions that are preliminary to the merits, such as whether their arbitration contract even covers the claims that a party seeks to litigate. This case requires us to consider several "gateway" questions. Peter Anderson sued his former employer. The district court compelled him to arbitrate his claims and dismissed his suit. Anderson now argues that his arbitration agreement did not cover his claims, that it was unconscionable, and that his employer failed to give adequate consideration in return for his agreement to arbitrate. But the agreement reserved his coverage and unconscionability arguments for the arbitrator to resolve, and his former employer gave adequate consideration. We thus affirm the decision to compel arbitration. But we also hold that the court should have stayed rather than dismissed Anderson's suit.
For 18 years, Anderson worked for Charter Communications, a telecommunications company that most of the public knows as "Spectrum." Charter fired Anderson in 2018 after coworkers complained that he had used offensive language. Asserting that their allegations were false, Anderson brought a bevy of state-law claims against Charter in Kentucky state court. Charter removed Anderson's suit to federal court.
Charter then moved to compel arbitration and dismiss (or, in the alternative, stay) the suit. In 2017, Charter had announced a "Solution Channel" dispute-resolution program in an email to employees. The email told employees that they would agree to arbitrate employment disputes with Charter unless they opted out within 30 days. Anderson did not opt out. With a few exceptions, the agreement thus required Anderson to arbitrate "any dispute arising out of or relating to" his termination from Charter. Agreement, R.5-2, PageID#87.
The district court held that Anderson agreed to arbitrate his claims. See Anderson v. Charter Commc'ns, 2020 WL 3977664, at *3 (W.D. Ky. July 14, 2020). It compelled arbitration and dismissed Anderson's suit with prejudice. We review the court's decision to compel arbitration de novo. See Bratt Enters. v. Noble Int'l Ltd., 338 F.3d 609, 612 (6th Cir. 2003).
The Federal Arbitration Act makes arbitration agreements "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 Act creates a substantive body of federal arbitration law that requires courts to enforce arbitration contracts "according to their terms." Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 529 (2019). These terms commonly indicate that an arbitrator shoulddecide the merits of the claims that one of the parties might raise against the other. A hypothetical employment contract, for example, might note that the employee must arbitrate any employment claims that the employee has against the employer under the relevant laws. See, e.g., Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407, 1413 (2019); Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 109-10 (2001); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 23 (1991).
Yet arbitration agreements often send more than the parties' legal claims (like those hypothetical employment claims) to arbitration. An agreement might also state that an arbitrator should decide preliminary issues that arise before the merits—what the Supreme Court calls "gateway" questions about the "arbitrability" of the claims. See Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68-69 (2010). The Supreme Court has developed different rules for different types of gateway questions.
Some gateway questions concern an arbitration agreement's "coverage." Suppose that the hypothetical employee argues that the parties' arbitration contract does not cover the employment claims raised in court. Who should decide whether the agreement includes them? Courts presumptively decide this coverage question on the background assumption that the parties did not mean to arbitrate it. See First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944-45 (1995). But if the arbitration contract unambiguously indicates that the arbitrator gets to decide whether the contract applies to the claims, courts must respect that choice and send the question to arbitration. See Henry Schein, 139 S. Ct. at 530.
Other gateway questions concern an agreement's "enforceability." Suppose that the employee argues instead that a court should resolve the merits of the employment claims because the contract that contains the arbitration clause is invalid under a general contract-law theory like unconscionability or duress. Who should decide whether the employment contract or arbitrationclause is enforceable? The Supreme Court's answer to this question distinguishes between a general challenge to the contract as a whole and a specific challenge to the arbitration clause. See Preston v. Ferrer, 552 U.S. 346, 353-54 (2008); Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444-45 (2006); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04 (1967). A general challenge to the entire contract (for example, a claim that the contract was fraudulently induced) must be sent to the arbitrator even when it might invalidate the arbitration clause too. See Prima Paint, 388 U.S. at 403-04 ( 9 U.S.C. § 4). Conversely, a specific challenge to the arbitration clause (for example, the claim that it was fraudulently added at the last minute) must be decided by a court before the court compels arbitration. See Buckeye, 546 U.S. at 444-46.
This same distinction applies even when an employer and employee enter into a separate contract that is solely about arbitration. Suppose that this standalone arbitration agreement contains a "delegation clause" that requires the arbitrator to decide questions about the contract's enforceability, such as the employee's claim that the arbitration agreement is unconscionable. If the employee's unconscionability claim attacks the entire arbitration agreement rather than the delegation clause, the arbitrator gets to decide the claim. See Rent-A-Ctr., 561 U.S. at 72. If, by contrast, the employee's unconscionability claim attacks the delegation clause specifically, the court must resolve that claim before sending the suit to arbitration. See id.
Still other gateway questions concern an agreement's "formation." Suppose that the employee argues that a court should resolve the employment claims because the employee never entered into the contract containing the arbitration clause (say, the employee argues that the arbitration agreement has a forged signature). An arbitration contract, like any other contract, rests on the parties' consent. See Lamps Plus, 139 S. Ct. at 1415-17. So a party generally may not becoerced to arbitrate if the party has not agreed to it. See VIP, Inc. v. KYB Corp. (In re Auto. Parts Antitrust Litig.), 951 F.3d 377, 382-83 (6th Cir. 2020). Indeed, the Supreme Court has repeatedly disclaimed the notion that its cases compel a party to arbitrate the fundamental question whether the parties agreed to arbitrate at all. See Rent-A-Ctr., 561 U.S. at 70 n.2. Courts instead must decide whether the parties actually entered into an arbitration agreement before sending the dispute to arbitration. See Sevier Cnty. Schs. Fed. Credit Union v. Branch Banking & Tr. Co., 990 F.3d 470, 475 (6th Cir. 2021); see also, e.g., MZM Constr. Co. v. N.J. Bldg. Laborers Statewide Benefit Funds, 974 F.3d 386, 401-02 (3d Cir. 2020); Berkeley Cnty. Sch. Dist. v. Hub Int'l Ltd., 944 F.3d 225, 234 (4th Cir. 2019); Lloyd's Syndicate 457 v. FloaTEC, L.L.C., 921 F.3d 508, 514-15 (5th Cir. 2019); Rivera-Colón v. AT&T Mobility P.R., Inc., 913 F.3d 200, 207-08 (1st Cir. 2019); Neb. Mach. Co. v. Cargotec Sols., LLC, 762 F.3d 737, 741 & n.2 (8th Cir. 2014).
These background rules doom Anderson's three challenges to the district court's decision to compel arbitration. First, Anderson raises a "coverage" claim: He argues that his arbitration agreement with Charter does not cover his specific claims in this suit. That is so, Anderson says, because the parties' agreement "specifically excluded" "[c]laims older than the statute of limitations applicable to such claims[.]" Agreement, R.5-2, PageID#88. Anderson asserts that this carveout applies here because the one-year statute of limitations for his claims ran between the time that he sued and the time that the district court compelled arbitration.
Yet Anderson ignores that his agreement unambiguously sent this coverage question to the arbitrator. Henry Schein, 139 S. Ct. at 530. The agreement noted that "all disputes related to the arbitrability of any claim or controversy" should be submitted to arbitration; it added for good measure that "the arbitrator shall have the sole authority to determine whether a particular claimor controversy is arbitrable." Agreement, R.5-2, PageID#87, 89. Thus, the arbitrator must decide whether Anderson's claims in this suit fall within the arbitration exclusion for untimely claims.
Second, Anderson raises an "enforceability" claim: He argues that his arbitration agreement with Charter is unconscionable. For two reasons, however, the arbitrator must decide this unconscionability claim. To begin with, Anderson has never challenged (and so has forfeited any challenge to) the district court's holding that his...
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